Victoria Stage 4 Lockdown – what does it mean for the Melbourne property market?

It’s an irony that Melbourne, which has won the mantle of the world’s “most liveable city” more times than any other city in the last decade, will remain in Stage 4 lockdown for virtually 3 months.Covid 19 Corona

Last weekend Premier Daniel Andrew extended the original 6 week lockdown, extending the ban on inspections of properties for sale or rent.

So what does this mean for the Melbourne property market?

This blog is being updated regularly so work your way down it to see how things have played out

This information current as at Monday 21th September and will be updated regularly.

The Melbourne Market is on hold.

Since the extension of Melbourne’s lockdown buyers cannot inspect properties and agents can’t conduct on site auctions so as you can see from the charts below, the Melbourne property market has gone into hybernation.

However the lesson we can learn from the other states is that once Melburnians are allowed to inspect and transact properties, there will be a rebound from the pent-up demand.

Melbourne Auction

 

Melbourne Property

Melbourne Property

 

Melbourne buyers and sellers trapped – Update Wednesday 9th September

Many property buyers and sellers in Melbourne have been caught short by the extension to Victoria’s lockdown meaning some will face a significant financial loss.

The continuation of the ban on property inspections means the only option for people who desperately need to buy or lease a property will be to make that decision ‘sight unseen’.

Before the introduction of Stage 4 restrictions, people could visit a property one-on-one with an agent.

Under Victoria’s extended lockdown, home inspections by appointment and public auctions with limited numbers will not be permitted before October 26 at the earliest.

This means that homeowners homebuyers you had recently bought a home can no longer sell their home, and sellers who have committed to move out of the property that they sold cannot inspect a new home to buy or even rent.

It is likely that many property settlement will be delayed, but this has a domino effect because buyers are sellers, and sellers are buyers, meaning people on the other side of the transaction will not be able to keep the commitments and many will face significant financial consequences as a result of the restrictions.

The Melbourne property market has been virtually frozen and will remain so for a period of three months.

While agents can still list new properties for sale, and many are now using video tours to help display these properties, very few buyers will commit to buying a property sight unseen recognising virtual tours don’t really show faults, overshadowing from neighbours, or provide spatial awareness when it comes to room sizes.

Real Estate Institute of Victoria president Leah Calnan said the move would compound the financial stress on Victorians and the Victorian economy and do nothing to help those suffering during these difficult times.

“We have cases being reported every day where people need to sell their property to get through these financial challenging times, and they can’t do so because the government won’t allow even a one-on-one inspection,” Ms Calnan said.

Many real estate agents are angry considering that physical on-site meetings will be permitted from 13 September in the construction industry and display homes will be open by appointment only from 28 September.

They rightly say that there seems to be no difference between these settings and allowing a private one on one inspection for a property that is vacant.

Are landlords the forgotten people? – update September 6th

The Real Estate Institute of Victoria is seeing growing evidence that commercial and residential landlords are being left behind and all but forgotten as the government makes decisions on financial support for people impacted by the economic downturn.Tenant

The decision to extend the rental moratorium to 31 December 2020 without proportionate attention to the landlord’s distress is one such example.

Tenants have been provided with substantial financial support from the government as well as mandated rent reductions at the expense of property owners.

This support is set to continue for more than three months to the end of this year.

While residential property owners had steeled themselves for the six-month moratorium with compassion, empathy and a good dose of trepidation, this extension has been a ‘kick in the guts’ for them and their goodwill is being sorely tested.

I don’t dispute that many tenants are doing it hard, but recently the REIV expressed its concerns of the lack of due process, oversight, and enforcement to ensure that no one takes undue advantage of the situation.

There is significant evidence of some tenants taking advantage of these circumstances rendering property owners powerless to fight against the imbalance.

Much has been made of the perceived imbalance in the rental market by tenant support groups who take a one-sided view of the market, while property managers see both sides of the relationship.

Leah Calnan, REIV President explains:

“Many of our agents are reporting tenants who simply refuse to pay their rent either in full, or at all.

Basically, it is a free-for-all.

We have many accounts of tenants owing thousands of dollars where this money is unlikely to be recovered.

The moratorium was supposed to support those in financial hardship as a result of Covid, not create greater hardship and financial bankruptcy for property owners.”

Update, Wednesday 12th August 10:00am

Here are answers from the Victorian government to many of the common questions you may have regarding Stage 4 Lockdown

Can friends or family help me move house?

You can only assist someone in another household to move house where care and supports is required due to age, infirmity, disability, or because of their health.

Can tradespeople come into my home?Buy And Sell

Yes, for emergency repairs only.

You must ensure physical distancing by keeping at least 1.5 metres distance between you and the tradesperson at all times, and wear face coverings.

Minimise physical contact by paying with a direct bank transfer or contactless payment.

Can my renovation proceed? 

Tradespeople and builders can only visit your home for renovations if you have fully vacated the property and are not staying there during the period of Stage 4 restrictions.

If you have vacated the property, then renovations can proceed in line with restrictions on residential construction.

If you’re still living at the property, then tradespeople and builders can only make emergency repairs.

Can I leave home to undertake emergency maintenance of a property other than my place of residence?

Yes, you may leave your home to undertake these duties, however, physical distancing should be maintained by keeping 1.5 metres between you and anyone else on site.

You should keep your time at the property to a minimum and wear a face covering.

What is considered an emergency repair for a tradesperson to visit?Vacancy

Emergency repairs are urgent repairs, which must be undertaken to keep members of the household safe, to prevent members of the household from injury, to prevent property damage or damage to goods, or for urgent repair to an essential service (for example a water connection or internet service).

If you need to have a tradesperson over, maintain your distance, wear a face covering and minimise physical contact by paying with a direct bank transfer or contactless payment.

Is landscaping allowed?

Personal landscaping services are only allowed for urgent repairs, for example a fallen tree.

Professional landscape services for new build construction can only be undertaken in vacated sites and in compliance with the small-scale construction rules.

Work is not permitted in an occupied residential site unless it is required in an emergency or for safety reasons.

Can I have someone attend my property to complete routine maintenance such as gutter cleaning?

No. Only emergency home repairs should be undertaken.

If I plan on selling my home, can I have a valuation of my property undertaken?For Sale

Property valuation can only be undertaken remotely, valuers are not permitted to attend premises in person.

Can insurance assessors visit my home to make an assessment?

Yes. An insurance assessor can attend in the case of an emergency assessment.

If this can be done remotely, it should.

If I’m moving house, can I have a cleaner? Can I use a removalist?

If you require a cleaner due to disability, impairment or as a result of your tenancy agreement, you may use a cleaner.

You may use a removalist. Friends and family can only assist someone in another household to move house where care and supports is required due to age, infirmity, disability, or because of their health.

Where possible, it is encouraged that vacancy is held out until beyond the restriction period set to conclude on 13 September 2020.

Can I leave my home if I fear for my safety or the safety of my children due to a family violence situation?

Yes. If you or your children are escaping harm or are at risk of harm from family violence, you can leave your home to seek support and assistance.

If you are stopped by police, tell them you are feeling unsafe at home and they will help you.

Family violence frontline services, including crisis accommodation, continue to operate to support women, children and families during the coronavirus (COVID-19) emergency.

There are options for accessing safe housing if you need to leave a violent situation or you are not safe in your home.

Call safe steps on 1800 015 188 or email [email protected] for help 24 hours a day, 7 days a week.

Apartments and multi-dwelling properties

Apartments and multi-dwelling properties in metropolitan Melbourne with shared facilities are being asked to help keep residents safe.

For more information view Multi-dwelling Properties with Shared Facilities Guidelines.

What are the penalties for non-compliance?Melbourne

Victoria Police can issue on the spot fines of up to $1,652 for individuals and up to $9,913 for businesses for:

  • Refusing or failing to comply with the emergency directions
  • Refusing or failing to comply with a public health risk direction
  • Refusing or failing to comply with the Public Health Directions to provide information.

Fines of up to $20,000 for individuals and $100,000 for businesses are possible through the court system. Individuals who do not wear a face covering and do not have a lawful reason can be fined $200.

Update, Tuesday 11th August 3:00pm

Weekend auction results:

Unfortunately vendors who had planned to sell their properties in Melbourne this weekend had the rug pulled out from under them by LockdownII, and while some properties were converted to an on line auction, other vendors had to withdraw their properties from auction to sell them by private treaty.

Interestingly even on line auctions in Melbourne are not allowed to be conducted from real estate offices which are meant to be closed due to the Stage 4 restrictions, but must be conducted from the auctioneers home, and this added to the confusion this weekend.

Yet Melbourne’ preliminary auction clearance rate was reported as 60% – a very respectable figure considering the unusual circumstances.The First Coronavirus Case In Athens Is Confirmed, Greece 27 Feb 2020

Moving forward, hundreds of auctions around Melbourne are set to be cancelled in the next six weeks, as vendors pull their properties off the market because of the city’s stage 4 coronavirus restrictions.

In-person property inspections are now banned under the new rules, meaning prospective buyers will only have the option of completing virtual tours online, and that’s not the way to buy a property.

You really shouldn’t buy a property without inspecting it. You really need to see, feel and touch the property.

In reality the number of property transactions occurring in Melbourne over the next 6 weeks will be minimal.

But this also means property values won’t crash – the market is just going into hybernation.

Update, Friday 7th August 6:00pm

The REIV have advised that the following:

METRO MELBOURNE – WHAT WORK IS PERMITTED:

1. Services required for end or start of lease

  • This can include final inspections, key collections, final cleaning and any other services directly related to the start or end of lease only.
  • You must ensure that the requirements listed above are adhered to.
  • The tenant may move in or out of the property keeping all the requirements like face coverings, one person at a time etc. in mind

2. Services related to completing a property settlement

  • This can include final inspections, key collections, final cleaning etc. and any other services directly related to the settlement.
  • You must ensure that the requirements listed above are adhered to
  • The buyer may move in to the property keeping all the requirements like face coverings, one person at a time etc. in mind.

3. All other inspections can be online only

4. Auctions must be online only

REGIONAL VICTORIA – WHAT WORK IS PERMITTED

As advised earlier:

  • All inspections must be by private appointment only
  • All auctions must be online only
  • People should work from home unless they are unable to

TRAVEL BETWEEN MELBOURNE AND REGIONAL VICTORIA

Travel from between Melbourne and Regional Victoria is only permitted for one of the reasons stated under “METRO MELBOURNE – WHAT WORK IS PERMITTED”

  • A resident of Melbourne must adhere to the Stage 4 restrictions even when they travel to Regional Victoria.
  • A resident of regional Victoria must adhere to the Stage 4 restrictions while they are in Melbourne for the permitted reasons .
  • A buyer or tenant moving in or out of a property, may travel between the areas while meeting the requirements of Stage 4.
  • A prospective buyer or prospective tenant cannot travel between the areas, only online inspections are permitted

Here is some context….

Despite a triple whammy consisting of:

  1. A pandemic that has kept much of the Australian economy on temporary life support, either via the federal government’s JobKeeper and JobSeeker schemes or loan repayment relief from banks.
  2. Australia slipping into recession, something we haven’t experienced for over 30 years
  3. World social and political unrest

…our property markets have remained remarkably resilient so far as the following stats from Corelogic show us.

Corleogic Auguist Property Values

But the pandemic and its associated economic shock are likely to have long lasting impacts on our housing markets.

Just as the Melbourne property market stated to show signs of a recovery through June and early July with more buyers and sellers entering the market, Melbourne entered Stage 3 Lockdown and has now entered Stage 4.

Under Stage 4 ‘Stay at Home’ Restrictions the default is that workplaces in metropolitan Melbourne are closed unless the workplace is part of a permitted industry.

All Victorians are required to work from home, except where this is not practicable.

And property sales in regional Victoria will face stage three restrictions.

Under both stage three and four restrictions, only one-on-one private inspections and online auctions will be able to go ahead, allowing buying selling and renting properties to continue.

Real Estate Institute of Victoria president Leah Calnan said:

“As of yesterday (Sunday), we were still able to conduct online auctions and private inspections by appointment,” she said.

“Agents have continued to acknowledge the very privileged place they work in. We’ll make sure they continue to abide by the highest level of hygiene and processes.”

What does this mean for property values?

It’s too early to tell, but the lockdown is likely to put Melbourne’s property market on hold for at least six weeks while buyers and sellers go on strike.

A small number of transactions are going to continue.

If you have already arranged to move, plan to, or end up having to during the six-week lockdown period, that is still okay.

Premier Daniel Andrews has indicated sale settlements and moving home will continue to be permitted.

Obviously there will be some people who recently sold their home who will need to find a new one.

And there are some people who bought their home recently who now need to find sell the old house.

These people will be in trouble as the Lockdown regulations forbid personal inspections of properties.

Sure there are those virtual tours, but don’t but a property site unseen – there are too many unknowns and virtual tours are a bit like reality TV shows – not like rela life.

The problem is that life will still go on…

People will get married, get divorced, have babies and unfortunately die (hopefully not from Covid) meaning people will still need to transact property.

The REIV has been petitioning the government explaining that housing provides shelter and is an “essential” industry. Hopefully someone will listen.

As for property values…property prices didn’t crash during the last lockdown and are unlikely to do so this time round as there won’t be many forced sales.

However what happens at the other end of the Victoria’s stage 4 lockdown will depend a lot on consumer confidence, how high unemployment gets and what government support packages are put in place to support Victorians.

Melbourne’s real estate market could be just like New Zealand’s, which suffered a month of no activity under that country’s effort to contain spread of the virus, but picked up again after that with significant pent-up demand.

In New Zealand once the economy opened, everyone was raring to go and the result was record numbers of property transactions.

I just bought a home in another suburb and need to renovate it so we can move in. Are we allowed to continue visiting the house?

According to DHHS, travel to a second-place of residence is generally not permitted, but some exceptions – including in an emergency or for maintenance – exist.

Speaking on Monday, DanieleAndrews said it was likely there would be allowances for “transactions that are already in train”.

“I don’t want to see people not able to settle on their home. I don’t want to see people who are supposed to move from one place to another because the lease has run out unable to do so,” he said.

My residential lease is ending. Can I look for a new rental property?

According to Department of Health and Human Services (DHHS) guidelines, Melbourne residents are only permitted to leave their home for the following reasons: to shop for essential items or services, exercise, to care for someone or for medical reasons, or to work if unable to do so remotely.

Moving house however is an exception to this, but private inspections by appointment for prospective rental houses are not permitted.

Can I still rent out my investment property?

One of the most impacted sectors of our housing market amidst COVID-19 has been the rental markets.

The rental market has been more heavily affected than the buyers’ market in the current crisis, with a combination of falling demand and rising supply.

And no doubt Victoria’s Stage 4 restrictions will curb many tenants plans to move .

Rent1

But, as we understand it at present, you can still rent your property, however prospective tenants cannot inspect vacant properties, and can only inspect them on line.

Can you move house or help others move house even if it means travelling outside the five-kilometre radius?

Yes, you are able to go beyond the five-kilometre radius of your residence for the purpose of moving house as long as it is within the permitted curfew hours (not after 8pm or before 5am).

For anyone hoping to help you move under Stage 4 restrictions, however, it’s less clear.

Under Stage 3 restrictions, members of your household and one other friend or family member are permitted to help you move.

Can tradespeople come to my home?

The new restrictions allow critical repairs to residential premises, where required for emergency or safety.

What about the construction industry?

The construction industry — described by Premier Daniel Andrews as “in many respects the lifeblood of the Victorian economy” — will be allowed to keep operating at a scaled-back level.

New small-scale construction, meaning projects less than three stories, can continue with a maximum of five workers on site at the one time.

Large scale construction can also continue to undertake restricted operations as can state civil construction.

Now is the time to take action and set yourself for the opportunities that will present themselves as the market moves on

Flat Design For Team Work Concept

If you’re wondering what will happen to property in 2020–2021 you are not alone.

You can trust the team at Metropole to provide you with direction, guidance and results.

In challenging times like we are currently experiencing you need an advisor who takes a holistic approach to your wealth creation and that’s what you exactly what you get from the multi award winning team at Metropole.

If you’re looking at buying your next home or investment property here’s 4 ways we can help you:

  1. Strategic property advice. – Allow us to build a Strategic Property Plan for you and your family.  Planning is bringing the future into the present so you can do something about it now!  This will give you direction, results and more certainty. Click here to learn more
  2. Buyer’s agency – As Australia’s most trusted buyers’ agents we’ve been involved in over $3Billion worth of transactions creating wealth for our clients and we can do the same for you. Our on the ground teams in Melbourne, Sydney and Brisbane bring you years of experience and perspective – that’s something money just can’t buy. We’ll help you find your next home or an investment grade property.  Click here to learn how we can help you.
  3. Wealth Advisory – We can provide you with strategic tailored financial planning and wealth advice. Click here to learn more about we can help you.
  4. Property Management – Our stress free property management services help you maximise your property returns. Click here to find out why our clients enjoy a vacancy rate considerably below the market average, our tenants stay an average of 3 years and our properties lease 10 days faster than the market average.

 

icon-podcast-large

Subscribe & don’t miss a single episode of Michael Yardney’s podcast

Hear Michael & a select panel of guest experts discuss property investment, success & money related topics. Subscribe now, whether you're on an Apple or Android handset.

Need help listening to Michael Yardney’s podcast from your phone or tablet?

We have created easy to follow instructions for you whether you're on iPhone / iPad or an Android device.

icon-email-large

Prefer to subscribe via email?

Join Michael Yardney's inner circle of daily subscribers and get into the head of Australia's best property investment advisor and a wide team of leading property researchers and commentators.


Michael Yardney

About

Michael is a director of Metropole Property Strategists who help their clients grow, protect and pass on their wealth through independent, unbiased property advice and advocacy. He's once again been voted Australia's leading property investment adviser and one of Australia's 50 most influential Thought Leaders. His opinions are regularly featured in the media. Visit Metropole.com.au


'Victoria Stage 4 Lockdown – what does it mean for the Melbourne property market?' have no comments

Be the first to comment this post!

Would you like to share your thoughts?

Your email address will not be published.
CAPTCHA Image

*


Copyright © Michael Yardney’s Property Investment Update Important Information
Content Marketing by GridConcepts