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Melbourne property market not as dire as it looks

PR Newswire

Broadbeach Waters, Qld., Sep. 10, 2020 /Medianet/ --

While Melbourne rides out the second wave of the COVID-19 pandemic, things for the property market are not as bad as they may appear, according to RiskWise Property Research.

CEO Doron Peleg said while many homebuyers might find the state of the market “quite alarming”, the situation was not as bad as it seemed.

Pete Wargent, co-founder of Buyers Buyers, a national marketplace now offering affordable buyer’s agency services to all Australians, said that while auction volumes and clearance rates are “extremely low” and Melbourne prices had been hit with the strongest reduction among the capital cities, the growth fundamentals and projections in time will rebound to be very similar to those of Sydney.

“Before the first wave of COVID-19, the Melbourne and Sydney projections were similar, the cities showed the same volatility, and experienced a very similar recovery,” Mr Wargent said.

Mr Peleg of RiskWise said that “although they had previously been affected by credit restrictions by APRA, scrutinising of loan applications as a result of the Royal Commission and material price reductions due to fears over changes to negative gearing and capital gains tax until the election results in May 2019, houses in both capital cities tend to enjoy strong demand and deliver solid capital growth.”

“In addition, over the medium and the long term, solid price growth is highly likely for houses, particularly due to a systematic undersupply in the inner and middle rings. At the beginning of 2020, before the onset of the pandemic, we were projecting both Sydney and Melbourne to reach new peaks this year” Mr Peleg said.

Mr Peleg said the projection was aided by the largest population growth in the country with Victoria at 1.9 per cent and Melbourne at 2.3 per cent, and unemployment rates for both the state and city sitting at 4.8 per cent -  key factors to support demand for housing.

He said while the landscape of the property market in Melbourne had changed since COVID-19, with 3.5 per cent price reductions in the past three months, being the largest decline across all capital cities, and rises in unemployment to 6.8 per cent in Victoria and 7.3 per cent in Melbourne, there was still good news for property buyers.

“External migration will continue to have a positive impact on both cities as it is both a medium and long-term driver for those drawn to the general employment opportunities available,” he said.

“In addition, the Victorian Government is expected to announce a major economic recovery plan totalling about $18 billion over a two-year period in the upcoming budget.

“So even though the second wave of COVID-19 has had a further impact on the property market in Melbourne, the scarcity and chronic undersupply of family-suitable properties, which is also evident in Sydney, will keep the market buoyant. In addition, Geelong, which is only one hour from the capital city, has been enjoying incredible capital growth over recent years thanks to its lifestyle, accessibility to employment hubs and affordable housing.

“So, if you take a five-year approach, you can see that despite all these negative events, the Melbourne property market, along with the surrounding areas, delivered good capital growth.”

Mr Wargent of Buyers Buyers said that even under the current conditions, houses in Melbourne would likely deliver solid capital growth in the medium to long term, and owners who had good equity and could hold on to their properties with stable employment were likely to remain in a solid position.

Mr Peleg of RiskWise stressed, however, that investors buying rental apartments unsuitable for families were taking an enormous gamble, with both equity and cash flow risk expected to materially increase. Serviceability is also a major factor for investors who rely on a stable rental income to cover the costs associated with property and particularly the mortgage.

For all media enquiries, contact Buyers Buyers Media Manager Tatiana Marchant on 0410 655020 or email tatiana@buyersbuyers.com.au

 

Visit www.buyersbuyers.com.au/weintelligence


ENDS

About Buyers Buyers:

Buyers Buyers is a national marketplace offering affordable buyer’s agency services to all Australians. Our ‘best in class’ nationwide panel of expert agents gives every Aussie a fair go in the housing market by reducing time, cost and stress through the property buying process. All data referred to is sourced and verified by independent research house Riskwise Property.

 


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