It’s been a wild few months for the people of Melbourne. With Stage 3 and Stage 4 lockdowns, it can be hard to feel stable and confident in these uncertain times. There is no doubt we are all doing it tough. Yet, we at View Bank Homes are optimistic that as a community, we will be stronger, more resilient, and better connected on the other side.
For those who are directly affected by the COVID-19 pandemic, our hearts and thoughts go out to you. For many of us, however, for whom life is business as ‘unusual,’ it can also be a strange and confusing time. With inflammatory media headlines causing a raucous in consumer confidence and fear in the market, it is as vital as ever to remain level-headed, aware and informed.
We are continually being asked by buyers where the Melbourne property market is heading. On one side, we have those who ask us if the market is going to crash. On the other, we have those who ask us if now is the best time to buy, given the low competition and interest rates.
As always, whether to buy or wait is dependent upon your individual circumstance. To aid you in your decision, we have compiled the latest market information and forecasts from property market experts.
The market now
There is no doubt that the Melbourne property market has recently slowed. When Melbourne began to open up, market activity reflected this. Yet with the introduction of Stage 3 and then Stage 4 lockdowns, consumer confidence began to decrease. Most buyers are hesitant to purchase given the uncertain times.
There has been a decline in investor demand in the Melbourne property market. The majority of demand is coming from first home buyers. This is likely mostly due to the government incentives available. First homes buyers can receive up to $35,000 in incentives; $25,000 HomeBuilder Grant for new builds and renovations and the $10,000 First Home Owner Grant.
Where we see it going
Despite the provocative headlines regarding the Melbourne property market, those in the industry do not forecast a ‘future economic cliff’. As Ben Kingsley on The Property Couch Podcast states, ‘the government does appear ready and will do more to tow the budget in regards to further spending to ensure we don’t see any harsh decline in economic activity.’
As for Melbourne property prices, despite what the media may have us believe, many in the industry are confident they will remain stable. Notwithstanding the months in lockdown and the downturn of economic activity, the index results as at July 31 2020 show that the property market remains ‘remarkably resilient’. As Michael Yardney’s Commentary highlights, ‘the property prices didn’t crash during the last lockdown and are unlikely to do so this time round’.
Many in the property industry are predicting high competition levels in the upcoming months as a result of pent-up demand. While the pandemic has caused devastation for some, others (and many) are still ready and capable of purchasing. The property industry expects a sharp increase in economic activity, coming not only from the usual spring-selling season but also from the suppressed demand of 2020.
The risk for buyers is, therefore, quite high. As Kingsley comments, ‘we speak to a lot of buyers every month. A lot of people are telling me that they are going to wait until September and wait to see what happens.’ We at View Bank Homes have also experienced this sentiment.
The worry for buyers is that by waiting and entering the market when everyone else does, the sudden upsurge in demand will add pressure to Melbourne property prices. The result? You may end up paying a premium as demand drives up prices.
So, what now?
Whether to buy or to wait is a hard question to answer. If you are in the position to buy, now could be a perfect time. Competition is low, as are the interest rates. You could purchase your dream home before the price rises, as many are predicting they will. We acknowledge that although you can’t inspect properties during stage 4 lockdown, many properties have virtual tours and photos that you can look at as a starting point. Speak to the relevant agent about this material. It’s a good way to start your research and narrow down the properties that you want to inspect when the restrictions are lifted. On the contrary, now may not be the right time for you to purchase – especially for those whose job security is unstable.
Ultimately, the decision is yours. No one can be entirely sure of where the market will go. All we have is the current data and the expected projections from those in the industry. Don’t be afraid to research and ask questions. We are big believers in using this to help us find clarity and stability in these uncertain times.
For those in the market for a new home and want to take advantage of the current government incentives, be sure to discover Seven Eighty Five and Liston – our latest developments in Reservoir. Both developments are eligible for the $25K HomeBuilder Grant, $10K First Home Owners Grant and Stamp Duty Savings. Click here to enquire now.