Lockdown to stall property price growth

By Gerv Tacadena | 04 Aug 2020

The state government of Victoria announced stage four restrictions amid the COVID-19 outbreak, which will impose an 8 p.m. to 5 a.m. curfew in metro Melbourne for non-essential activities — how will these measures affect the property and construction industries?

Nerida Conisbee, chief economist at Realestate.com.au, said the slowdown in the construction sector might trigger concerns.

"The residential market is what it is, but construction will be the big one, given its importance to the Melbourne economy," she said.

State Premier Daniel Andrews said while the construction sector is the lifeblood of the economy, there is a need to bring the sector into pilot-light levels. This will help the industry to still keep going even with a limited number of allowed people working onsite.

"For major construction sites, that means the absolute minimum required for safety — but no more than 25% of the normal workforce onsite. Small-scale construction will be limited to a maximum of five people onsite," he said.

Danni Hunter, chief executive for Victoria at Urban Development Institute of Australia, said the industry is quick to adapt to the protocols. She said the sales market would be able to leverage technology and other solutions to keep things moving.

"We're finding ways to leverage technology, so we can give buyers the information and the visual experiences they need to make a home purchase with confidence," she told The Herald Sun.

Victoria managed to defy the approval downtrend in June. This, however, could be short-lived given the state's current market conditions.

"The second Melbourne lockdown is weighing negatively on turnover and will drag on new dwelling demand in Victoria, amplifying geographical discrepancies in the housing demand over the short-term," said Maree Kilroy, an economist from BIS Oxford Economics.

Still, interest in Victoria's property remained intact despite the restrictions in June. In fact, the average days-on-market of homes in the state went down to 41 days. Selling times were even shorter in Melbourne, where it only took 39 days.

"There remains a huge interest from buyers despite the state undergoing restrictions due to the pandemic. These figures show that our state's property market is holding strong and delivering great results across the board," said Leah Calnan, president of REIV.

In terms of public auctions, the extension of the lockdown period could further increase the number of properties being withdrawn. Eliza Owen, head of residential research at CoreLogic, said sellers might be reluctant to test the auction environment under the lockdown.

"The physical restriction on auctions, as well as dampened consumer sentiment, will likely see auction volumes fall further in the coming weeks," she said.

Top Suburbs : willliamstown , emerald , st peters , coolbellup , sth toowoomba

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