Open for inspections are now once again permitted. It’s great news for Melbourne’s resurgent property market, as it continues to gather momentum into 2021 and rebound from COVID-19. It's also a timely moment to pay tribute to property industry workers and customers alike, and their ability to successfully overcome what’s been a very challenging year for Victorians.
Winter 2020 may be the season of vendor content
The property market is operating remarkably well in most places. With prices either steady or only modestly down, conditions are far better than we could have dared hope for back in the early days of the pandemic in March and April.
The great fear had been that buyers would desert the market en masse causing vendors to either accept substantial price drops to transact or to abandon their campaigns.
But the market didn’t seize up, and there was no overhang of stock. Many buyers stayed the course. This buyer resilience was unexpected, so few new vendors subsequently entered the market in April. By May we reached the curious position where sales-to-new-listings ratio was 1.3, according to CoreLogic. Like toilet paper in March, a shortage of stock was emerging.
In hindsight we know that the swathe of government measures – an effective lockdown, cuts in interest rates, and support to employers and employees, landlords and tenants – plus the swift crushing of the pandemic curve, shored up confidence.
Economic commentators across the world have hoped for – but mostly discounted as wishful thinking – a V-shaped economic decline and bounce back. Well, we have arguably had such a V-shaped recovery in the property market. The combined capital city auction clearance percentage rate collapsed from the low 70s to the mid-30s in late March according to CoreLogic. It then wallowed there for most of April, but then recovered strongly in May and now sits in the mid-60s.
Confidence begets confidence and there is plenty of evidence that momentum is building, initially for buyers. Realestate.com.au last week reported that property search volume on its web site in the week ending 14 June was 48 per cent higher than the corresponding period 12 months previously, having recovered beyond the 2019 level in early April and has accelerated away ever since.
Prospective vendors have got the message and are stirring. CoreLogic tracks pre-listing activity by its estate agent clients, having identified it as a strong predictor of near-future listing strength. This pre-listing work recovered to 2019 levels earlier this month, suggesting healthy listing supply in coming weeks. Broadly, I agree, although I suspect that a conditioned wariness about listing in winter will restrain supply somewhat.
Given these demand and supply signals, could winter be a good opportunity – and even a sweet spot – to list property (assuming we are just considering owners who have the luxury of choosing when to sell)?
Well, we are of course in a world of significant unknowns. There might be a second wave of infections. The government tapering of financial support may or may not go well. Some aspects of life and the economy that look weakened for at least a year or two – population growth, tourism, retail, hospitality and entertainment sectors – may eventually stall the nascent economic recovery.
Given the multifaceted complexity of our lives, personalities, and our property assets, prospective vendors will quite reasonably come to different decisions about whether to act early or hold off.
Overall, I expect most vendors will opt to wait out until well into spring (and even 2021) in the hope that the outlook for the pandemic, economics and property become even clearer.
But I’ll be admiring the courage and thinking of those vendors who’ll take the road less travelled by and end up going sooner and selling this winter or early spring. By concluding that the risks may be no better in say November than in June and acting now when demand is ahead of supply, their decisiveness may well be rewarded. R Wakelin