By Nicole Cox
The traditionally busy spring selling season is likely to be flatter this year, but property experts predict that pent-up demand will prompt a flurry of activity once the second coronavirus wave eases and Melbourne’s stage four lockdown is lifted.
Leading real estate analysts say the market is largely holding firm, despite the pandemic and some challenging economic conditions, and many have been surprised by its strength.
“We are still seeing a lot more activity in the market than we otherwise would have expected, but the outlook for property does remain highly uncertain,” said Nerida Conisbee, chief economist at realestate.com.au.
“We are seeing buyers and sellers being pretty active, although it is quite different across different states. Obviously in Victoria at the moment, sellers aren’t active because you aren’t allowed to do open for inspections, whereas in Western Australia and Queensland things are pretty much normal or more positive than they were six months ago.
“Traditionally, spring is when we see the most listings, the most activity. Compared to last spring it will be very different, but compared to the winter just gone it will be looking like a far better market across most locations, perhaps with the exception of Melbourne.
“I don’t think we are going to see runaway growth in pricing but I think it will remain more stable than we would expect going in to a recession.”
Melbourne to ‘bounce back quickly’ post-lockdown
Ms Conisbee said first-home buyers would continue to be active, while some markets, including the apartment sector, could endure some distress and she expected very few transactions in off-the-plan developments.
There was an air of nervousness due to the second wave of COVID-19 and Melbourne’s stage four lockdown, which will remain in place until at least mid-September, she said.
“People are cautious at the moment and when people are cautious they tend to look for better quality investments – and that’s across the board whether you’re looking at shares, metals or property.
“Melbourne is a high-risk market at the moment. Certainly, what we saw in Australia once the first lockdown ended was a big bounce back so I think it’s likely we will see Melbourne bounce back quite quickly, definitely for listings, once the lockdown ends.
“If you’ve had no listings for a six-week time period, there will be some pent-up activity that will have to come through regardless, and hopefully if confidence is maintained, we will continue to see Melbourne do quite well.”
East coast markets will do better than others
Buyers agent and host of the Property Couch podcast, Bryce Holdaway, said there was still demand for quality properties, but some sectors faced challenging times this spring.
“I think quality real estate in this country on the east coast, in particular, generally will still have a fair bit of desire,” Mr Holdaway said.
“Medium to high rise and some house and land estates will be challenged but quality established stock will be fine because you have this pent-up demand from owner occupiers who are itching to get in.
“For specific, inner urban, established properties with strong owner occupier appeal, I think this spring selling season will be quite different to anything we’ve experienced before. I really feel this pent-up demand will create even more [demand] and the prices of A and B grade stock will have to take some upwards pressure given the demand.
“It’s going to be like seagulls fighting over a chip.”
Mr Holdaway said most elements of the market were primed, but buyers needed to return.
“I liken the Australian property market to a car at the moment,” he said. “The engine, which is the RBA, is fully tuned. They have got interest rates down to a level that we’ve never seen before and they’re not going up any time soon. So, the engine is ready to go.
“Then we’ve got the federal and state governments at the bowser pumping fuel into the car. They’re throwing cash left, right and centre to stimulate the economy.
“The only problem we’ve got is the driver can’t get into the car. As soon as they can get in the car…they’re going to be doing a burnout on the way to the destination.”
Demand remains for high-quality properties
The predictions come as Melbourne agent Sam Hobbs, from The Agency, this week announced he had sold three high-end St Kilda listings in seven days during stage four restrictions. The sales totalled more than $13 million.
Mr Hobbs sold the prestige home at 5 Crimea Street off market, as well as the Edwardian property at 11 St Leonards Avenue, which had been listed since Australia Day 2020. The mid-tier home at 14a Havelock Street sold within four days on market.
“The transaction of these three well-presented homes, two of which are at the premium end of the market, shows the extremely strong buyer demand for quality properties within inner city Melbourne, despite COVID-19 and its economic implications,” he said.
“There are smart buyers out there identifying the opportunity to upgrade at this time.”
The Agency Melbourne general manager, Peter Kakos, said the sales signified promise for the upcoming spring selling season.
“This all indicates pent-up buyer demand leading into our spring selling season, which will be compressed down from several months to two months. This is a highly anticipated spring selling season.”
Spring selling will last longer
Real Estate Buyers Agents Association of Australia president, Cate Bakos, said it was likely buyers, particularly in Melbourne, would re-enter into a positive and vibrant market once lockdown restrictions were lifted.
“In Melbourne, in particular, during July, August and early September, we tend to have pretty low stock volumes at that stage anyway, because we’re still in the middle of winter, we usually have our football season running and people tend to wait it out for a spring opportunity,” she said.
“But this time around, the lockdown has really stifled the opportunity for the vendors that are looking at having an early spring campaign and perhaps an auction in September.
“That’s very difficult now because the typical timeframe for open for inspections and campaign activity is usually about four weeks before auction, and of course, if [Melbourne] is in lockdown until close to mid-September, that means that we’ll be pushing a lot of auction activity into October.”
Ms Bakos said now was the time to speak with a lending broker or bank to get “purchase ready” and recommended thoroughly researching your personal requirements, including location and price range to ensure suburbs you are interested in match your budget.
“You’ll have compromises to consider, because you need to make sure when you hit the ground running, you’re looking at properties that are in your budget that will appeal to you.”
Originally published as Pent-up demand set to bolster spring selling season in the wake of lockdowns