Needs change as buyers adjust to new world
The full impact of the COVID-19 pandemic on Melbourne’s residential property market will not be known for months, or even well into 2021.
But what is already apparent is that a number of key factors are contributing to a new set of conditions that will shape the market in the short to medium term.
For many families, this will necessitate a move to larger homes, properties with studies or standalone workspaces, and homes with more aesthetically pleasing spaces in which to spend the day working.
Flexible working arrangements are driving an increased attraction to regional and lifestyle locations for many families, who will no longer be tethered to a requirement to commute to the CBD. This is evidenced by positive growth in dwelling values across Ballarat, Geelong, Bendigo and other regional hubs in the three months to June, despite COVID-19 impacting values in other markets. Jellis Craig’s Sorrento office has reported significant increases in buyer interest throughout the pandemic, with a sea change now appealing to many workers who have traditionally held city jobs, while some parts of Ballarat have seen strong price growth over the past 12 months.
Forced changes in living, work and travel conditions for Melburnians have created a never-seen-before level of transience in the market, as demographics adjust to life under COVID-19 restrictions.
Central to the changes reshaping Melbourne’s property landscape is the movement towards working from home, which although introduced as a temporary measure, is likely to remain a key pillar of how Melburnians live and work into the future.
CoreLogic data shows that Melbourne’s inner suburbs have been acutely exposed to the rental downturn
Loss of work across a number of key industries has also forced many younger adults back into the family home, leading to a tenant exodus in some areas. CoreLogic data shows that Melbourne’s inner suburbs have been acutely exposed to the rental downturn, as a large proportion of workers in these areas are employed in industries that have been hit hardest by lockdowns, such as arts, accommodation, food and recreation services. As a result, while rent values across wider Melbourne have declined overall by around 1%, in suburbs such as Southbank and Melbourne it was as high as 7% in the June quarter as tenants moved home to save money. Some estimates put the national number of younger adults moving back in with their parents early in the pandemic at 330,000.
Similarly, restrictions on global travel mean the tens of thousands of international students who would normally occupy a large proportion of Melbourne’s inner-city apartment and student accommodation market are currently residing overseas, leaving a large number of apartments vacant, and in turn driving rents down.
This could create opportunities for first homebuyers and younger purchasers as investors seek to reduce their debt exposure by offloading apartment assets, which will boost stock levels at lower price points.
Conversely, some sections of the market have seen increased demand since early in the pandemic as the global COVID-19 situation and weakened Australian dollar saw wealthy expats return to Australia and seek out new accommodation in key inner suburbs. REA Group chief economist Nerida Conisbee says an influx of returning expats will almost certainly be a consequence of COVID-19, with many of them joining the hunt for properties in affluent areas in the city’s inner suburbs.
It is clear that Melbourne’s property landscape has shifted rapidly in recent months for buyers, vendors, renters and landlords, as COVID-19 forces residents to become more flexible and, in many cases, more transient. But while the city’s rental market may have been impacted in the short-term, the pandemic has also provided opportunities for many buyers to enter or re-enter the market under a new set of conditions and with fresh property goals.
THE REPORT
2020 edition
