In regional Victoria there were no open for inspections or on-site auctions, but sales continued to be made and we saw a strong demand with properties still selling quite quickly and at, or in excess of, their quote range – a reflection of the shortage of properties driving competition between buyers and keeping prices up. There is an emerging trend of people, having now adapted to working remotely, increasingly looking at their options of working and living outside of Melbourne with the attractions of a sea or tree change and, generally speaking, a lower cost of property. I think this trend will continue over the coming months.
In Metropolitan Melbourne, the property market effectively shut down for two months with offices closed and no physical inspections of properties possible. We saw some sales continue to completion during the early part of August where people had inspected a property before lockdown and made an offer, but that number gradually decreased as the lockdown continued. The sales we did see during this period were predominantly off-the-plan, vacant land and development sites. What was interesting was that there still some sales that were made where the buyers were only able to inspect a property virtually. A good example of this was a $4.4 million sale (which was right at the top of the quote range) of a magnificent family home in Park Orchards which was sold without a physical inspection and the sale was completed on the last day of the real estate lockdown, prior to inspections being allowed.
I believe there are two points we can take out of this. Firstly, there is still a very strong underlying demand for property and while the Melbourne market has gone through some turmoil in recent months due to COVID, the prices have generally held up extremely well, demonstrating the value that purchasers see in the market. The second point is that it also highlights the continuing lack of choice buyers have due to very few homes coming on to the market. This is not meeting existing demand and therefore prices are continuing to perform strongly – achieving the top of their quote range in most cases.
Looking ahead, what can we expect to happen in the market? What we are seeing now, (as I write this during the third week in Metro Melbourne after restrictions for real estate were eased and private inspections were allowed again) is an expected pent up demand for property that couldn’t be met in Stage 4. The industry is still restricted to private inspections and unable to do group open for inspections so agents are having to work hard to schedule all the appointments needed to enable buyers to inspect homes. We are often seeing in excess of 30 to 40 individual inspections and this translates to high demand for a relatively low number of homes. In these first three weeks, we are seeing properties sold quite quickly, often a couple of days after coming on the market, and they are selling for really good prices.
In the coming weeks, we expect there to be a steady flow of properties on the market. Broadly speaking, banks appear to be continuing to work with mortgage holders so we don’t expect to see a flood of properties coming to the market because people are forced to sell. What this means is that between now and the end of the year, while the supply of properties for sale will increase, there will still be a shortage. What we are seeing with this short supply is that at times properties are selling without being advertised on the major real estate websites. In fact, our Exclusive Preview online function, which is a way for sellers to test the market without a large marketing budget, helped many buyers find properties before they were widely advertised.
I believe a lot of sellers will now choose to auction their property, recognising that this gives them the opportunity to maximise the price they achieve. Victorians have taken to our online auctions like ducks to water, understanding that this process provides them with a safe, accessible and legal way of participating in an auction.
Is now the right time to be going to market? Unequivocally yes. If you are thinking of selling then my advice is to do it sooner rather than later, while there is a shortage of homes for sale so that you can get the best outcome.
Looking beyond the new year, and without a crystal ball, I think that with the easing of JobKeeper and support from the banks, we may potentially be heading into softer marketing conditions which will still provide good selling opportunities, but in a more balanced market between buyers and sellers.
The Barry Plant Group