Michael Bleby | 20 Sep 2020
Melbourne’s suppressed real estate market will burst out of the blocks once pandemic-driven restrictions lift and buyers and sellers make up for lost time in a spring season that is already surging ahead in Sydney, economists and agents say.
Extended bans on open inspections and on-site auctions in the city that was formerly the country’s auction capital are only due to end on 26 October – although the state government has hinted at the possibility of easing them earlier – and buyers and sellers will be keen to make what they can in the truncated pre-Christmas market.
“People are going to want to get out and start buying again,” said Melbourne buyers’ agent Emma Bloom. “There are already a lot of people waiting for things to get the green light.”
Much uncertainty hangs, however, over the city that had just 11 online auctions scheduled last week – that’s just over 1 per cent of the 1020 auctions in the equivalent week a year ago – and whether vendors will put their homes to the market in a truncated spring season.
In addition, the number of distressed sales by owners no longer able to service mortgages as bank repayment holidays, JobKeeper and JobSeeker support measures ease is also unclear.
The pandemic also casts a cloud over the future of the Sydney market. CoreLogic’s initial figures show the city chalked up a preliminary clearance rate of 72.4 per cent on the 562 reported results of the city’s 679 scheduled auctions. This was higher than the previous week’s preliminary 70.4 per cent rate – subsequently revised down to 65.9 per cent.
The figures, in line with separate numbers reported by Domain Group – majority-owned by Nine, publisher of The Australian Financial Review – also showed a preliminary clearance rate of 89.2 per cent in Canberra, based on the 65 reported results of 74 scheduled sales, 64 per cent in Adelaide and 61.9 per cent in Brisbane.
There will be more distressed selling.— AMP Capital’s Shane Oliver
In Sydney’s inner-western Dulwich Hill, a downsizing couple on Saturday beat 12 other registered bidders to pay $525,000 over reserve for a renovated four-bedroom house. The 38a Constitution Road home had 160 groups visit it during the campaign and it sold for $2.6 million.
“We had a real mix of buyers for this home: upsizers, downsizers and a range of other people wanting to move into the area,” Ray White Petersham agent Nicholas Arena said.
The improving Sydney market was good, but it is yet to feel the effects of the pandemic, AMP Capital chief economist Shane Oliver said.
“It’s still masking the underlying dynamic which has been the hit to the economy, higher for longer unemployment, a bit hit from reduced demand as with regard to immigration and above-average rental vacancy rate, pushing downward pressure on rents, which will pressure investors,” Dr Oliver told the Financial Review on Sunday.
“There will be more distressed selling.”
At the very least, agents are preparing to tap buyers in the top end of Melbourne’s market as soon as restrictions lift. RT Edgar agent Jack Edgar will soon test the market with a campaign for a 4200sq m block of land at 16 St George’s Road in Toorak.
The large Queen Anne-style home on the site – owned by Peter Devitt, the boss of construction company LU Simon, until he sold it for $18.5 million in 2013 – was demolished by purchaser Xiaoyan “Kylie” Bao in 2015. The site remains a vacant block.
Ms Bao put it on the market last year with a $40 million-plus price guide, The Age reported, but it failed to sell. Market sources put the asking price at about $39 million. Mr Edgar declined to comment.
One kilometre away, the five-bedroom home of James Calvert-Jones, a son of Rupert Murdoch’s sister Janet Calvert-Jones and her husband John, has also gone on the market with a price guide between $13 million and $14 million.
The campaign wasn’t necessarily anticipating the end of restrictions, said sales agent Andrew Hayne, who declined to comment on his client.
“We do quite few transactions, sight unseen,” Marshall White agent Mr Hayne said. “If we can do it for expats, why not do it for the local market?”
But in the lower-priced segments of the market, uncertainty remains. A delay in the resumption of activity in Melbourne could see the market only start operating normally in November.
“The risk is that the market gets pushed into next year, and we all know of the risks to the market that is awaiting us in 2021,” Ray White Group managing director Dan White said.
But where restrictions ease, activity is returning. Curbs lifted in regional Victoria last week to permit agents to show as many as nine people through a property and this had boosted competition between buyers, especially given that stock that was about half of its typical level, said Ray White Bendigo agent Brent Mason.
“There’s a bit of a buzz going on here at the moment,” Mr Mason said. “We’re doing 15 per cent of our deals to people from Melbourne – that’s probably double what it normally is.”
And in Melbourne, agents are anticipating a similar boost.
“Christmas Day will be a day of rest,” Kaye & Burton director Michael Gibson said. “But I don’t think any day either side will be a day of rest. We have had many months now of inactivity and people will want to get deals done.”