What is going to happen to property prices in the next two years or what is going to happen when we hit 80 per cent single dose or 80 per cent double dose vaccinations in Melbourne? We have put together some information on lockdown restrictions and housing market predictions for the rest of 2021 and into 2022/2023.
What are the current lockdown rules for real estate?
The lockdown rules for Melbourne’s housing market are currently eased only slightly until we reach the roadmap goals for vaccination. So in Greater Melbourne, Latrobe Valley and Mitchell Shire, you can have private inspections of one family at a time with the estate agent staying outside. The inspection is held by private appointment only and the current occupants of the property cannot be home during the inspection. This applies to rental inspections and selling inspections. All auctions must be online, in-person auctions are banned under Melbourne’s current lockdown rules.
For the rest of Victoria including Geelong, the Surf Coast Shire and Ballarat which are now out of lockdown, the rules apply differently; house inspections by private appointment and a maximum of 10 people plus the agent. Auctions can go ahead with a maximum of 10 people. If you are thinking about buying or selling and wanting to know what conveyancing costs click here for conveyancing costs.
Will house prices drop after COVID-19?
KPMG conducted a recent report on the effects of COVID 19 on the housing market in all major capital cities. They found that the pandemic did interrupt the predicted upswing in housing prices predicted at the start of 2020. But government intervention with targeted policies and a decline in mortgage interest rates actually contributed to a dramatic rise in house prices in the last 6 – 9 months. So in fact it turns out that the pandemic has caused an increase in property values that would not have been as high if COVID was not around.
The report stated house prices are expected to be 4% to 12% higher than if there was in fact no COVID-19 pandemic. And units up to 13% higher. So the soaring price growth does not look to be slowing down, following the same pattern of growth from last year.
Should I buy an investment property during covid?
A lot of investors and first home buyers did ask themselves and experts if buying a property during the pandemic was wise or a bad move? Quite frankly since the time we are living in is a once in 100-year event there is no expert that could have given a definitive answer.
Now we have had some time since 2020 when the pandemic arrived on our shores in Australia, Melbourne has some data which can offer real factual insights into the question of buying property in Melbourne. The median home price in Melbourne according to Domains House Price Report (June 2021) is $1,022,927 which is up 16.2% from 12 months ago.
So in asking how much does a house cost to buy in Melbourne? The answer is over $1 million. The lockdown and pandemic have done little to stem the house price growth of Melbourne. Combining this house price growth with historic ultra low-interest rates means if you bought an investment property in Melbourne in the last 12 months you would have seen a return on your investment. The trends for the next 12 months are predicted growth also and the reserve bank has made no indication of raising interest rates any time soon.
Should I sell during lockdown?
In stage 4 restrictions you are allowed to sell your home, real estate agents have pivoted to online auctions. And our Conveyancing team provides online conveyancing services. Our online conveyancing has been service on offer as a standard feature before restrictions or online/remote work was the norm. As our customers can access almost paperless conveyancing and cut back on unnecessary and cumbersome paperwork. Plus it saves time and money using technology for faster, more convenient services.
Real estate agents provide virtual home inspections and can pivot sales to still be successful in lockdowns. But according to Domain this Spring in Melbourne may reflect the 2020 71% plunge in house sales. Domain advised in August 2021 Melbourne property listings fell by 17.3% and the clearance rate fell to 47.1%.
This seems to indicate that selling during lockdown is still possible but your pool of buyers is lessened due to lockdown stage 4 restrictions. Now though with 70% single-dose vaccinations targets reached and 80% single-dose vaccination rates about to be reached private inspections have resumed. So expect to see an increase in home sales. Buyers have had time to think about what they want and knowing the property price rises will be wanting to buy before further rises happen.
What happens to property prices after lockdown ends?
Will property prices rise dramatically after lockdown for Covid 19? If we look to last year when the long lockdown of 2020 ended then expect to see a massive jump in home selling and buying. Fewer houses on the market in lockdown means fewer sales. When we meet 80 per cent vaccine single dose thresholds which Premier Daniel Andrews has said will happen on Wednesday the 29th of October, inspections can once again resume for all properties, not just unoccupied homes.
Domain saw a 292% listing increase once the 2020 long lockdown ended! And the median price grew 4.2% in the first month after the lockdown ended.
So housing experts say this should advise how the market will react this time around in 2021. The market will rally and sales plus prices will benefit. New listings will also hit the market with sellers holding off until restrictions are eased. So demand in the housing market and an increase in supply across all capital cities, as the Sydney and Melbourne lockdowns also affect interstate buys. This means the material decline of available housing during the covid 19 pandemic lockdowns in big cities for the past year will be gone. Extra savings certain buyers have will see residential property sales hopefully boom to make up for the past housing sales slump.
** image sourced https://www.earthstructuresgroup.com.au/