Sellers are delaying listing their properties due to the uncertainty caused by the latest wave of COVID outbreaks and lockdowns, although buyers are still keen to snap up homes.
The latest REA Insights Housing Market Indicators Report shows conditions in Australia’s booming housing market remain strong, but realestate.com.au director of economic research Cameron Kusher said the lockdowns are hitting vendor confidence.
“Vendor confidence is clearly being damaged by lockdowns and not just in those areas where lockdowns are occurring but across most parts of the country,” he said. “Selling a property becomes much more difficult during a lockdown and it is likely most vendors would prefer not to list under those conditions.”
The report showed the lockdowns affecting half of Australia’s population during July had a moderate impact in temporarily slowing the strong housing market over the month.
“The national housing market continues to see prices rise, strong demand, heightened search volumes, a fast rate of sale and high levels of enquiry,” Mr Kusher said.
“However, the return of lockdowns has had a moderate dampening effect on many of these metrics throughout July.”
Greater Sydney was in lockdown in July, while Victoria had a fifth lockdown lasting 12 days and South Australia a seven-day shutdown.
Mr Kusher noted the slowdown was also partly due to winter being a typically quieter period for the housing market, adding spring would be a key test.
“We’re now nearing the ‘selling season’, which will be a litmus test for the housing market, depending on how interrupted it is by ongoing lockdowns,” he said.
“Typically, demand and supply ramps up in spring and it will be interesting to see whether the market strength returns to levels seen earlier this year.”
South-east Queensland emerged from its snap lockdown on Sunday and regional Victoria came out of the state’s sixth lockdown on Monday.
But restrictions in Melbourne have been extended by another week until at least 19 August and the Sydney lockdown will run for all of August and likely through September.
Sales slow during lockdowns
Preliminary sales volumes on realestate.com.au fell by 7.6% last week to their lowest level in seven weeks as Australia’s three largest cities of Sydney, Melbourne and Brisbane experienced lockdowns.
Mr Kusher said while seasonal factors could be playing a part in the recent weakness in sales volumes, ongoing lockdowns will likely lead to a further weakening in sales.
“The coming months will be a test for the market’s resilience as even in those states not in lockdown, sales have slowed over recent weeks,” Mr Kusher said.
Preliminary sales volumes were now 23% lower than their peak earlier this year in April, the report noted.
Despite the recent declines, preliminary sales over the first 32 weeks of 2021 are still 53.3% higher than over the same period in 2020.
Homes are still selling quickly but not at record speeds.
The median number of days a property was advertised for sale on realestate.com.au before being sold moved to 39 days in July from 38 days in June, but was much lower than July 2020’s 61 days.
“For states with extended lockdowns, transacting on property remains difficult and will likely lead to increases in days on site,” Mr Kusher said.
“Elsewhere, the housing market continues to experience tight supply of stock for sale and strong demand, which should ensure days on site remain relatively low.”
With many sellers delaying putting their properties on the market during lockdown, the RBA’s latest Statement on Monetary Policy released on Friday noted the supply of properties newly listed for sale has declined over the past month.
Mr Kusher said the number of views per listing on realestate.com.au for properties available for sale increased by 4.9% in July, to be 46.1% higher year-on-year, as lockdowns reduced the supply of new stock for sale.
“New listing supply moderated due to lockdowns and with lockdowns extending into August, it is reasonable to expect a further tightening,” Mr Kusher said.
“Although search volumes have eased, they remain historically high, which in turn suggests that views per listing will remain at elevated levels over the coming months.”
Buyer demand remains high during lockdowns
Buyer demand has so far remained strong during the lockdowns.
“There’s really been little sustained impact on buyers throughout lockdowns,” Mr Kusher said.
“If anything, lockdowns are making it tougher for buyers because it is leading to less stock available for sale, so you have the same volume of competition but a much shallower pool of properties that people are competing for.”
Search volumes on realestate.com.au increased by 2.4% last week, the first rise in four weeks and the largest increase in 17 weeks, the report said.
“It seems that with more people locked down across the country, it has led to an increase in property searches,” Mr Kusher said.
Overall search volumes increased in NSW, Victoria and Queensland last week during their lockdowns, while Western Australia and the Northern Territory recorded falls.
“As we move closer to spring and lockdowns continue in NSW and Victoria, we expect search volumes to remain at heightened levels,” Mr Kusher said.
The report said while search volumes in the buy section of realestate.com.au fell during July, enquiry levels lifted. Mr Kusher said that was likely due to the lockdowns and people being unable to physically inspect properties in the affected states.
Email enquiries to real estate agents on realestate.com.au rose by 7.2% in July, reaching its highest volume since March 2021.
The number of enquiries to developers increased by 16.7% in July after three consecutive monthly falls.
“Developer enquiry was given a boost due to lockdowns across several states and the lack of new established housing listings coming onto the market,” Mr Kusher said.
“This may continue to be the case while lockdowns are in place, resulting in high volumes of enquiry that are expected to continue over the coming month.”
The REA Insights Buyer Demand Index, which measures high-intent buyer activity on realestate.com.au, increased 0.9% last week. Demand to buy property remained resilient despite the lockdowns, realestate.com.au economist Paul Ryan said.
“As sellers delay bringing new properties to market until conditions normalise, our measurement of buyer demand will fall, as we saw during lockdowns in 2020,” Mr Ryan said.
“But later in the year, should this wave of the pandemic be brought under control, we expect a rebound in market activity and buyer demand.”
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