September 1, 2021 | Melbourne’s new Stop-Start Lockdown Property Market in 2021
Due to the ongoing and uncertain saga of Covid-19, Melburnians have been forced to adjust to new buying and selling trends in our property market this year. Multiple snap lockdowns in February, May, June, July, and August 2021 have forced physical property inspections to be banned, which naturally places a holding pattern on the market. The subsequent easing of restrictions then allows the market to reopen again as vendors can prepare and launch their properties for sale to prospective buyers to inspect.
This new stop-start lockdown cycle has been incredible to witness, and certainly challenging for people to navigate through. Here are some of the key observations which our team of Buyers Advocates have witnessed in this new climate;
Current Market temperament
It’s obvious that Melbourne’s property market is currently running at an incredible pace, and we are indeed in a seller’s market. This is of course mainly due to all time low interest rates and an enormous demand to upsize the family home to accommodate working from home and home schooling.
People spending so much time at home and not travelling has also amplified the need to change their home environment or suburb in which they reside. Demand for properties to accommodate lifestyle requirements like home gyms, bigger kitchens for cooking, offices and larger yards for children are also in high demand. Many expats have also returned to Melbourne which adds fuel to the fire of buyer competition.
Melburnians are always very quick to act when the sniff of a hot market is on the horizon. As soon as confidence or trends change, the media promotes it, sales prices start to surge, OFI inspections are like nightclubs and street auctions are widely attended. Right now, Melbourne is in a very hot market and the fear of missing out has really taken hold. Buyers don’t want to miss out as they know it will cost them more money in the future.
Property stock levels are a very big problem right now, and definitely another major reason for Melbourne’s hot market temperament. Many vendors are not listing their properties for sale due to health reasons and not wanting herds of people walking through their home and potentially spreading the Covid-19 virus.
Downsizers rarely require smaller accommodation in the current climate, and this means big family homes (currently most in demand) are not hitting the market. Buyers have also become buyer-sellers – a very common trend for a hot market, and means they want to buy on today’s price and sell on tomorrow’s price. This is also holding up stock levels as these properties are not hitting the market for sale as it’s taking buyers a very long time to buy their next home.
Physical property inspections banned during lockdown
The most challenging part of a snap lockdown is the banning of physical property inspections. Unfortunately, The Victorian Government doesn’t deem this as an essential enough service and believes this is too unsafe. Lobbying from other Governing bodies and real estate industry leaders haven’t been able to get this decision overruled. Unfortunately, this does not allow Melburnians to operate like most other Australian states which allows private one-on-one property inspections during lockdown.
Snap lockdowns
When a snap lockdown is announced, they are virtually instant and gives very minimal time for vendors and buyers to prepare – let alone the selling agents and Buyers Advocates who are representing their clientele.
During the initial phase of a snap lockdown, many quick decisions must be made by all parties to safeguard their property journeys as best as possible. As the uncertainty of the lockdown timeframe looms, the market is sent into a scramble and forces many uncomfortable decisions.
Market freeze
All six lockdowns to date have ranged from 5 days up to 8 weeks. With property inspections banned during this time, the market gets placed on hold until further notice. Very minimal transactions happen during this time, except for sales for properties or land that don’t require physical inspections as their intention is to be eventually knocked down for development purposes.
Sales campaign changes during lockdown
Vendors and selling agents need to collectively decide whether to proceed with their sales campaign or to postpone it. We have noticed that most auction campaigns in their third or fourth week, or ones that have strong buyer traction generally proceed to an onsite auction on the night lockdown is announced, or else hold an online auction on the following Saturday.
Other sales campaigns that have just launched and don’t have enough buyer interest will generally postpone their campaign until lockdown ends and physical property inspections can commence again. This is an attempt to drum up more enquiry and buyer interest before completing the sale.
Private Sale transactions in the current climate seem to be selling at record speed. Most Private Sale transactions are sold instantly or within 7 days of launching. These types of campaigns are rarely affected in lockdown.
Buying sprint until the next lockdown
The biggest emotional and financial decision of people’s lives are being sent into a spin during snap lockdowns. Many buyers are now forced to make a very quick buying decision due to strong competition and sales campaigns being cut short.
It is now common for sales campaigns to only conduct one or two OFI’s before a snap lockdown is announced. To our surprise, this now seems to be enough time to drum up strong buyer interest and run an earlier auction or Private Sale / EOI closing date.
This is forcing buyers to rush as they try beat the next snap lockdown announcement.
This could be coming at a huge future cost for buyers as they are not spending enough time at the property and making the wrong decision under these pressurised environments. Home buyers should be inspecting a home at least twice, and in an exclusive environment where they have one-on-one time with the property to ensure they build the right connection.
Unfortunately, we are also seeing many buyers proceeding with an acquisition without conducting the proper due diligence like contract reviews, building and pest inspections and council checks.
The birth of virtual campaigns and inspections
With many vendors hesitant to launch their sales campaigns due to another looming lockdown, virtual campaigns and inspections have started gaining momentum in 2021. This comes in the form of professional photography and floor plans conducted prior to lockdown, or in other cases, home videos produced by the vendors themselves (if during lockdown).
Selling agents are launching these properties online through the usual platforms realestate.com.au and domain.com.au in the hope to gain some enquiry for when the market reopens. What has come by shock to us all is the fact that many buyers are actually buying these properties based on a video!!
These actions reiterate just how hot the Melbourne property market is when buyers are paying millions of dollars and not even walking through their future home. Once again, this comes with a huge future risk for buyers as they could be buying a property of poor structural quality or one that doesn’t ‘feel’ right when they actually walk through the front door.
Buyer beware…… as you can see by these new unorthodox market trends, it is very easy to get caught up in all the current hype of buying a property just because the market is hot, or if you are trying to beat the next lockdown. Getting this process wrong can come at an enormous emotional and financial loss for you.
Please contact to one of our qualified Buyers Advocates for an obligation-free consultation to discuss your property requirements.
At Beckett Property, we embrace the changes to our city and the varying market conditions. We constantly strive to source new opportunities for our clients which unlocks the potential of each property and creates remarkable lifestyles within the Melbourne community.
Our commitment and dedication to our clients has firmly established our position as one of Melbourne’s most successful, consistent and creative Property Advisories. Our company is built on the foundation of experience, current industry and economic knowledge, ethical advice, networks, relationships, world-class customer service and optimum results.
If you are thinking about getting into the market to buy a Melbourne property in 2021, please feel free to contact us at [email protected].