The COVID-19 crisis has now stripped away 4.6 per cent from Melbourne home values, with the property market recording its fifth straight month of decline.
The 1.2 per cent drop to a $667,520 median in August was the biggest experienced by an Australian capital, according to CoreLogic’s Hedonic Home Value Index — more than double the next worst performer, Sydney, where the decrease was 0.5 per cent to a $860,182 median.
Melbourne’s median house and unit price has shed almost $30,000 since peaking at $695,761 in April.
CoreLogic head of research Tim Lawless said Melbourne’s result demonstrated “the impact of a worse viral outbreak relative to other cities, along with a larger demand side impact from stalled overseas migration”.
“The performance of housing markets are intrinsically linked with the extent of social distancing policies and border closures,” Mr Lawless said.
“It’s not surprising to see Melbourne as the weakest housing market considering the extent of the virus outbreak and subsequent restrictions, which have weakened the economic performance of Victoria.”
Premier Daniel Andrews has flagged a potential easing of restrictions this month, which the real estate industry hopes will allow for a market revival in spring.
ME Bank general manager of home loans Andrew Bartolo tipped an increase in market activity over the coming months, with first-home buyers and regional markets to be particularly lively.
“This spring, we may see an increase in listings. I don’t foresee new stock overwhelming current demand, but certainly anyone listing will be met with a high degree of inquiry,” he said.
“Buyer activity is expected to be overall lower than previous spring buying seasons, but buyers are still there and have a strong appetite for potentially bargain buys.”
But an ANZ report released last week, as Melbourne entered the fourth week of its harsh stage four lockdown, suggested more price falls could be on the way by forecasting a 15 per cent peak-to-trough decline for the city.
Real estate agents, photographers, stylists and buyers were banned from attending homes as a result of the restrictions introduced in early August, making it difficult to list and sell properties.
This was reflected in the latest data from SQM Research, showing the number of residential properties on the Melbourne market plunged 13.2 per cent in August.
SQM managing director Louis Christopher said the city’s market had experienced a “near entire freeze up” during the stage four lockdown.
The restrictions also barred metropolitan Melbourne residents from travelling to regional Victoria to inspect properties.
That market accordingly experienced a 0.5 per cent monthly hit to values, according to CoreLogic.
But both regional and Melbourne house and unit values remain higher than they were a year ago, with the former up 3.7 per cent and the latter, 5.9 per cent.
Mr Lawless said the nation’s regional markets had typically held up better throughout the pandemic, as they had “avoided the drop in demand caused by the pause in migration” and simultaneously become more in demand among capital city dwellers. This was due to their relatively low density and lower price points, and the “normalisation of remote work”.