Familiar pattern emerges as property market rocked by second wave

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July 27 2020
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Melbourne buyers and sellers are both worried about the second wave, with auction cancellations and clearance rates shifting downwards, new figures have revealed.

The six-week lockdown imposed in metropolitan Melbourne and the Mitchell Shire to curtail the resurgence of the coronavirus in Victoria has so far resulted in reduced clearance rates.

For the week ending 12 July (the first week of lockdown in Melbourne), the city reported a clearance rate of 51.2 per cent, dropping to 43.7 per cent in the second week (ending 19 July).

There were 545 Melbourne homes scheduled for auction this week. Of the 450 results collected so far, 186 were withdrawn results and 224 were successful, equating to a 41 per cent withdrawal rate and a preliminary clearance rate of 49.8 per cent.

However, it is not all doom and gloom for the Melbourne property market, with demand likely to be higher than figures suggest.

“The larger number of withdrawn auctions in Melbourne, which are counted as unsuccessful auctions, has seen the clearance rate drop from the early-to-mid 60 per cent range through late May and June to the low 40 per cent range over the past two weeks, while Sydney clearance rates are holding above 60 per cent,” the report said.

Removing withdrawn auctions from the clearance rate calculation shows the two markets are returning a similar “adjusted” reading in the low 80 per cent range, highlighting that those properties which aren’t withdrawn from the market are still finding buyers.

In the week ending 29 March, for example, CoreLogic notes that the portion of properties sold at virtual auction was just 9.2 per cent. For the week ending 12 July, however, the portion was 23.4 per cent – and hovered around the 20 per cent mark in the second week of lockdown 2.0.

“Given COVID-19 saw an adoption of online sales methods earlier in the year, real estate agents and auctioneers should be more prepared to pivot towards a ‘virtual’ auction environment, and virtual auctions may be more successful this time around,” the analysts suggested.

Moreover, a greater proportion of homes are being sold prior to auction in this new lockdown period.

More than 20 per cent of properties were sold prior to auction over the first two weeks of Melbourne’s lockdown, reflecting a similar trend first observed in late March.

“Furthermore, despite high levels of uncertainty, it is also interesting to see how quickly the auction market has rebounded as auction resumed across Victoria.

“If the last phase of lockdowns was anything to go by, the auction market, and more broadly, housing market activity, is likely to recover as restrictions are eased or lifted,” the report stated.

About the author

Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

About the author

Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

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