The spring sales season could be pushed back a few weeks, or even months, as lockdowns restrict activity in some states and territories, according to CoreLogic.
Prior to the COVID-19 pandemic, the participation rate for sales and registrations typically increases from September to November.
In the ten years up to December 2019, growth in new listings in spring averaged 15.7% while sales reached 6.8%.
Eliza Owen, head of research at CoreLogic, said sales and listings tend to be more seasonal in capital cities, particularly Sydney and ACT.
With the closures, however, the most in-demand locations might not see the same level of activity next spring, which is only two weeks away.
"Observing the performance of the housing market through lockdowns reveals that sales and listing volumes will drop through lockdowns," Ms. Owen said.
What can we learn from the Melbourne lockdown last year?
The extended lockdown in Melbourne last year could provide a glimpse of what could happen during this year's lockdowns.
Melbourne was in lockdown from mid-July to the end of October. During the period, registrations have fallen steadily, hitting their lowest point at 1,411 in the four weeks leading up to September, 80.7% below the previous five-year average.
Several factors contributed to the slowdown during the period.
Besides the obvious restrictions that limit inspections and auctions to virtual sessions, the low level of consumer confidence has also weakened overall market sentiment, with sellers unsure whether they would get an optimal price. for their properties. Mortgage repayment deferrals and other government aids also helped, as they prevented troubled sales.
However, when the restrictions in Melbourne were lifted at the end of October, there was a sudden change in the mood of the market, with listings quickly recovering.
"New listing volumes through December 2020 have shown an average trend 40.4% above the previous five-year average, suggesting that the spring 2020 sales season has been 'pushed back' into the last months of the year, ”Ms. Owen said.
Also read: Homebuyers retreat as closures hamper activity
Locks to defer market activity only
Ms Owen said the trend in sales and listings through foreclosure indicates the relative stability of the economy and the housing market amid the COVID-19 pandemic.
"This means that home buying decisions were more likely to have just been postponed because of lockdowns, rather than being dropped all together." "
In fact, the muted selling activity due to lockdowns actually led to increased sales in Melbourne in December 2020 and July 2021, a time when, seasonally, sales volumes would typically be a lot. more moderate.
“Favorable winds are in place for housing market demand to suggest this could happen again; household savings rates remain high, new average mortgage rates continue to hit new record lows, and numerous government fiscal stimulus and broader institutional responses have been resuscitated amid the closures renewed, ”said Ms. Owen.
Affordability Might Become a Concern
The steady surge in prices in capital cities in recent months has already brought inevitable constraints on affordability.
CoreLogic's hedonic home value index in July showed a 1.6% gain in home values, down from the previous growth of 1.9%.
Ms. Owen said some support programs that have supported consumer sentiment, such as JobKeeper and HomeBuilder, have already ended, which could dampen the expected rebound in demand.
The growing threat of the Delta variant of COVID-19 could also be a major headwind, as it could lead to further lockdowns that will ultimately impact Australian household incomes.
"With affordability constraints becoming a bigger hurdle in the market, as well as the potential for tighter credit terms later on, if buyer activity doesn't match up with buyers' activity. increase in listings, we may see a gradual rebalancing between sellers and buyers, "Ms. Owen said.
