The decision of the state government to reimpose lockdown measures in Melbourne could potentially hamper growth in sales activity over the next few weeks, says a market watcher.
Tim Lawless, research director for CoreLogic Asia Pacific, said what happened during the first lockdown in the state capital could happen again.
"The previous lockdown period saw real estate agent activity across Victoria slump by almost 70% before gradually improving post-Easter, with a sharp rise in activity once lockdown policies were eased around mid-May," he said.
This drop in activity foreshadowed a sharp decline in new listings across Melbourne. In fact, new listings shrank by more than half during the period.
"With advertised stock levels falling and a plunge in consumer sentiment, the lockdown period also saw sales activity drop to the lowest level since the early 1990s," he said.
However, as restrictions eased, new listings began increasing again. Still, Melbourne started recording drops in values. Over the June quarter, the city reported a 2.3% drop in dwelling values. This has been the largest decline across capital cities to-date.
"If the housing market's performance through the previous lockdown is anything to go by, it's highly likely that Melbourne property transaction activity will see a sharp drop over the next six weeks, with both a material decline in new listings as vendors lose confidence in testing the market, and a lower number of sales as buyers retreat to the sidelines," Lawless said.
While real estate agents are still ready to continue their businesses by going digital in their processes, Lawless believes that the weaker confidence could result in less buying and selling activity.
"Once the restrictions are lifted in six weeks-time there is likely to be a level of pent-up demand which will see housing activity improve, as it did when previously when social distancing measures were relaxed or lifted," he said.