Stage 4 lockdown is here with thousands of businesses and industries adversely impacted as well as hundreds of thousands more Melburnians unemployed as a result. The question many are asking right now is how stage 4 lockdown will impact the Melbourne property market and what the rules of play are. To address this point, I want to share with you a very good blog I read this morning which addresses this question – written by Michael Yardney (Director of Metropole Property Strategists and best-selling author of 8 books).
Michael Yardney’s blog…
It’s an irony that Melbourne, which has won the mantle of the world’s “most liveable city” more times than any other city in the last decade, has now gone into Victoria Stage 4 lockdown.
So what does this mean for the Melbourne property market?
This information is current at 7:00am Tuesday 4th August and will be updated regularly.
Let’s start with some context….
Despite a triple whammy consisting of:
- A pandemic that has kept much of the Australian economy on temporary life support, either via the federal government’s JobKeeper and JobSeeker schemes or loan repayment relief from banks.
- Australia slipping into recession, something we haven’t experienced for over 30 years
- World social and political unrest
…our property markets have remained remarkably resilient so far as the following stats from Corelogic show us.
But the pandemic and its associated economic shock are likely to have long lasting impacts on our housing markets.
Just as the Melbourne property market started to show signs of a recovery through June and early July with more buyers and sellers entering the market, Melbourne entered Stage 3 lockdown and has now entered Stage 4. Under Stage 4 ‘Stay at Home’ Restrictions the default is that workplaces in metropolitan Melbourne are closed unless the workplace is part of a permitted industry.
All Victorians are required to work from home, except where this is not practicable.
It seems that Melbourne’s property market will be able to continue to operate under tough, new stage 4 restrictions. And property sales in regional Victoria will face similar restrictions to Melbourne, with stage 3 restrictions to be introduced across the rest of the state from Wednesday.
Under both stage 3 and 4 restrictions, only one-on-one private inspections and online auctions will be able to go ahead, allowing buying selling and renting properties to continue.
Real Estate Institute of Victoria president Leah Calnan said:
“As of yesterday (Sunday), we were still able to conduct online auctions and private inspections by appointment,” she said.
“Agents have continued to acknowledge the very privileged place they work in. We’ll make sure they continue to abide by the highest level of hygiene and processes.”
What does this mean for property values?
It’s too early to tell, but the lockdown is likely to put Melbourne’s property market on hold for at least six weeks while buyers and sellers go on strike.
Clearly some transactions are going to continue, because there will always be non-discretionary buyers and sellers.
If you have already arranged to move, plan to, or end up having to during the six-week lockdown period, that is still okay.
Premier Daniel Andrews has indicated sale settlements and moving home will continue to be permitted. Obviously there will be some people who recently sold their home who will need to find a new one. And there are some people who bought their home recently who now need to sell the old house.
Life will still go on…
People will get married, get divorced, have babies and unfortunately die (hopefully not from Covid) and people will still need to transact property.
Property prices didn’t crash during the last lockdown and are unlikely to do so this time round as there won’t be many forced sales.
However what happens at the other end of the Victoria’s stage 4 lockdown will depend a lot on consumer confidence, how high unemployment gets and what government support packages are put in place to support Victorians.
Melbourne’s real estate market could be just like New Zealand’s, which suffered a month of no activity under that country’s effort to contain spread of the virus, but picked up again after that with significant pent-up demand.
In New Zealand once the economy opened, everyone was raring to go and the result was record numbers of property transactions.
I just bought a home in another suburb and need to renovate it so we can move in. Are we allowed to continue visiting the house?
According to the Department of Health and Human Services (DHHS), travel to a second-place of residence is generally not permitted, but some exceptions – including in an emergency or for maintenance – exist.
Speaking on Monday, Daniel Andrews said it was likely there would be allowances for “transactions that are already in train”.
“I don’t want to see people not able to settle on their home. I don’t want to see people who are supposed to move from one place to another because the lease has run out and unable to do so,” he said.
My residential lease is ending. Can I look for a new rental property?
According to DHHS guidelines, Melbourne residents are only permitted to leave their home for the following reasons: to shop for essential items or services, exercise, to care for someone or for medical reasons, or to work if unable to do so remotely.
Moving house however is an exception to this, and private inspections by appointment for prospective rental houses are permitted.
Can I still rent out my investment property?
One of the most impacted sectors of our housing market amidst COVID-19 has been the rental markets.
The rental market has been more heavily affected than the buyers’ market in the current crisis, with a combination of falling demand and rising supply.
And no doubt Victoria’s Stage 4 restrictions will curb many tenants plans to move .
But, as we understand it at present, you can still rent your property, however inspections by prospective tenants can only occur on vacant properties, and not for a property which is currently occupied by outgoing tenant or by its owners.
Property inspections must be by private appointment, with only one person and the property manager in attendance at the one time.
Can you move house or help others move house even if it means travelling outside the five-kilometre radius?
Yes, you are able to go beyond the five-kilometre radius of your residence for the purpose of moving house as long as it is within the permitted curfew hours (not after 8pm or before 5am).
For anyone hoping to help you move under Stage 4 restrictions, however, it’s less clear.
Under Stage 3 restrictions, members of your household and one other friend or family member are permitted to help you move.
Can tradespeople come to my home?
The new restrictions allow critical repairs to residential premises, where required for emergency or safety.
What about the construction industry?
The construction industry — described by Premier Daniel Andrews as “in many respects the lifeblood of the Victorian economy” — will be allowed to keep operating at a scaled-back level.
New small-scale construction, meaning projects less than three stories, can continue with a maximum of five workers on site at the one time. Large scale construction can also continue to undertake restricted operations as can state civil construction.
Mario Borg’s words of wisdom..
This horror show will pass, as sure as the sun will rise in the morning and set in the evening. Life will go on and return to normal..!!
It’s important to stay positive and to have faith knowing that this too shall pass.
The economy will bounce back and our property markets will return to perform in the usual way.
Do I have a crystal ball – clearly no – however I’m confident with the comments I make (above) as the fundamentals have not changed.
Remember that property is a human need – just like food and water – as it’s a roof over someone’s head.
Stay positive. We will all grow stronger – mentally – from this experience.
The Information is general in nature and does not take into account your particular investment objectives or financial situation. It does not constitute, and should not be relied on as, financial or investment advice or recommendations (expressed or implied) and is not an invitation to take up securities or other financial products or services. No decision should be made on the basis of the information without first seeking expert financial advice. Your full financial needs and requirements would need to be assessed prior to any offer or acceptance of a loan product. Subject to lenders terms and conditions, fees and charges and eligibility criteria apply.