According to a CoreLogic study, the spring selling season in Australia could be unusually moderate this year, and it could be because of Victoria.
Victoria & # 39; s Stage 4 restrictions will likely slow down the selling season as potential buyers and sellers pull out of the market due to a moderation in consumer confidence, said Eliza Owen, Head of Residential Research at CoreLogic.
Consumer confidence generally influences the level of buying and selling intentions in the market. In the midst of the ongoing COVID-19 pandemic, there was already a case where sentiment dropped but rebounded quickly. This happened between March and April – registrations and sales attendance declined, only to pick up quickly when restrictions started to ease.
"The low cost of debt and strong recovery in consumer confidence created pent-up demand for property as Australia edged out the viral curve," Owen said.
Double impact of COVID-19 restrictions
Owen said the COVID-19 restrictions have a dual impact on transaction activity. One of those impacts is the physical limitation of buying and selling properties under social distancing rules. Another impact is economic uncertainty.
"As consumption declines and unemployment rises, sellers feel less confident in selling their property and getting the price they want. This is further supported by the close movement shown between sales volumes and sales. ; consumer confidence index, ”she said.
Owen said that sellers and buyers are less likely to participate in real estate transactions during negative economic shocks or times of heightened uncertainty.
Most other capitals are now reporting an increase in new listings, as consumer confidence has improved as the outbreak contained in some key areas. However, new registrations in Sydney and Melbourne are still in the red, with the latter slowing the overall turnout significantly.
In Sydney, new listings edged down 1.9% in the month ending August 23. A much larger drop was recorded in Melbourne, where new listings fell 54.9%.
Even as restrictions in Melbourne ease, Owen said the resumption of transactional activity would likely be weaker.
"This is because employment takes another hit, consumer confidence is dampened by the reality of a second virus outbreak, and a reduction in budget support is not being made. is only a month away. Ultimately, the second round of restrictions in Victoria is likely to create a weaker "spring sales season" than in previous years, "she said.
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