The remarkable resilience of Victorian property and a record price gap between houses and units has become two of the main features of our real estate market during the pandemic.
Despite the lockdowns which have brought the economy and real estate industry to a standstill as the state moves to fight the spread of Covid-19, the market continues to witness strong price growth.
“There seems to be relatively little impact [of lockdowns],” CoreLogic Head of Research for Australia, Eliza Owen said.
“There has been little impact observed on prices.”
According to the respected property data group CoreLogic, circuit breaker lockdowns, of the kind recently enforced in Victoria, have led to short, sharp falls in sales and listings before a swift recovery in transaction activity.
As Australia begins to roll out its roadmap to recovery from Covid-19 and more and more Australians get vaccinated it is likely snap lockdowns will become less of a feature of government policy. However, if they do occur, they are unlikely to significantly impact home prices.
Confidence in the market across the country has been very strong.
According to CoreLogic’s Auction Market Review for the June quarter 2021, a total of 31,605 homes were taken to auction across the combined capital cities in the three months to June 2021. These figures make it the busiest quarter for auctions since the December 2017 quarter when 32,408 capital city auctions were held.
However, it is largely accepted across the market that the pace of price growth is slowing.
According to CoreLogic, dwelling values across Melbourne rose 7.7 per cent in the past year, and rose 15.9 per cent in regional Victoria. However, over the past three months through to July, that growth has been 4.6 per cent and 5.6 per cent respectively. Over the past month, prices have grown 1.5 per cent in Melbourne and 2 per cent in regional Victoria.
There has also been a marked difference in the demand for units and houses. Nationally over the past 16 months, since the beginning of the pandemic, capital city house values are up by 14.2 per cent compared to a 5.6 per cent rise in capital city unit values.
This difference is most stark in Melbourne, which has witnessed a record high in the difference between house ($929,769) and unit ($610,043) medians of 52.4 per cent. The Victorian capital has endured the weakest rental market performance of all capital cities since the start of the pandemic. A significant portion of rental stock are units, as such this has put downward pressure on demand across the city.
The Australian Bureau of Statistics expects a fall in the construction of units and a rise in the construction of new houses, which will likely see this price gap begin to narrow towards the end of this year.
Also, as incentive schemes such as HomeBuilder and some temporary stamp duty exemptions or concessions come to an end, more buyers, especially first home buyers are likely to return to looking to buy units instead of houses.