A shortage of available housing stock is driving strong results for sellers amid the coronavirus pandemic.
Experts say the limited number of listed homes is creating buyer competition and shielding the north-west Melbourne market from substantial price falls that had been anticipated due to COVID-19.
Brad Teal Head of Sales Bruce Warburton says would-be sellers should consider listing now, while buyers are having to compete for a smaller-than-usual pool of properties.
“We are seeing a distinct lack of properties in the marketplace, it is keeping prices up to a degree,” he says.
New data from SQM Research suggests vendors are already heeding this advice, with Melbourne’s total number of residential listings jumping 11.6 per cent from 34,437 in April to 38,447 in May.
This was the biggest month-on-month increase for Melbourne, but citywide listings are still 4.3 per cent lower than they were a year ago.
The Brad Teal Moreland team recently sold an unrenovated home in Shaftsbury Street, Coburg. The property attracted 80 inspections, nine registered bidders, five bidders on the day, and it sold for $1.45 million, almost $100,000 over its reserve.
Despite the “doom and gloom” perceptions of buying and selling conditions, Mr Warburton says house hunters are still active and delivering strong results across the north-west.
“The uncertainty due to the current climate has had prospective sellers questioning the best time to put their property on the market, but it hasn’t stopped people from buying,” he says.
“Mid-level properties in Gisborne, Sunbury and Keilor are selling particularly well, and we hope that strong momentum will carry over the months to come.”
The return of face-to-face auctions has been a big positive and a boost of confidence for sellers who now have the option to revert to traditional auction style campaigns.
Melbourne’s clearance rate made a rapid recovery as auctions returned to the streets on May 14, with a 70 per cent clearance rate from 110 results Victoria-wide for the first weekend of live auctions since the government ban in March.
“We’ve got over 80 auctions scheduled for June and July,” Mr Warburton says.
“There will be a real test of the market come June and July, those clearance rates will give us a true indication of the health of the market.”
Realestate.com.au data shows Moonee Valley produced a 100 per cent clearance rate in the week of May 30, with five homes selling under the hammer.
The Moreland City Council notched a 71.4 per cent clearance rate, selling 10 of the 14 properties at auction that same weekend.
Mr Warburton says the real estate industry braced itself for a bigger blow to prices than had been experienced so far.
House and unit values fell 0.9 per cent in May, making Melbourne the nation’s worst performing capital, according to property data firm CoreLogic.
Despite this fall, Melbourne values are still 11.7 per cent higher than they were a year ago and Mr Warburton expects property prices to stabilise in the coming months.
“There are positive signs that we are coming out of this crisis quicker and easier, I’m feeling optimistic,” Mr Warburton says.
“Drawing on experience from the 2018 downturn which coincided with the Banking Royal Commission, the market dropped and then rebounded so quickly.”
House and unit values shed about 10 per cent during that upheaval, which stretched from late 2017 to mid 2019, before rapidly recovering to hit a new record high before the pandemic struck.
SQM Research director Louis Christopher is predicting a Melbourne property market rebound in spring – traditionally the busiest selling season of the year.
“With the easing of coronavirus restrictions, sellers and buyers will return to the market,” he says.
“The September quarter will see minimal (price) rises capped by high unemployment and the ongoing closure of international borders.”
SQM found the average asking price for Melbourne houses marginally increased by 0.1 per cent to $1.04 million in May and for units, by 0.5 per cent to $565,000. Both figures are higher than they were a year ago.