The Effect of Coronavirus on the Melbourne Property Market

How Coronavirus has created opportunities for first-home buyers and up-scalers.

Covid-19 has seen the Melbourne Property Market lose some investment buyers, in particular those from overseas. But, while the majority of foreign investment is on pause, first-home buyers and those looking to upgrade their homes are taking the opportunity of low interest rates, and mild price decreases to enter the market. Subsequently, fewer properties are currently on the market which has kept competition for houses high – especially in the first-home market – and that’s meant that prices in this sub-$1m range have stayed steadier than expected. Refreshing news if you’re a vendor selling into this market; and even more refreshing if you’re selling in an in-demand suburb.

To offer a real-world example, Infolio recently acted as the vendor advisor on a 2-bedroom apartment in Elwood. We approached the agent with trepidation because, right now, it’s harder to predict value, and the depth of the buyer pool. But, our client, wanting to sell, decided to press on.

The first Open for Inspection came on the weekend that restrictions lifted, and open houses were permitted with limited numbers inside at the one time. There were 101 people through the apartment that weekend, and five offers above the quoted range by 4pm the following Tuesday. The property was subsequently sold to an unconditional buyer.

What we learned from the experience was the number of first-home buyers out there on the hunt. Providing they already have the deposit and the stamp in savings, then it’s more effective to buy now than continue to rent, and this is propping up the market.

We’ve noticed, too, people using the current situation strategically and taking the opportunity to scale up. Those who couldn’t afford that extra bedroom in their desired area before Covid-19, are discovering that now they can by taking advantage of softening prices in the upper end of the property market – reported to be 5%, give or take. As the above example illustrates, up-scalers are realising the window of opportunity this presents: they can still get a good price for their current home, then buy back in on a cheaper interest rate, and potentially 5% discount on something bigger.

So, unless you’re buying off-market, we’re predicting that competition will continue to keep prices fair and for strategic buyers and sellers this means opportunity awaits.