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What effect is Covid-19 having on Melbourne property prices

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20 April 2020

Good morning,

I hope you had a lovely weekend.

Australian property prices made the headlines in the media again over the weekend with reports that Melbourne property prices could drop by upto 10%.  Once again, I find myself in a position having to contradict what I am reading in the papers.

As we know, it is predicted that the unemployment rate will reach 10% in the coming months. Whilst terrible for those who have lost their jobs, this is only temporary.  The Government have done an amazing job helping small businesses get through these tough times by keeping many in jobs, maybe not earning what they usually would be earning, but enough to survive.

Australia is flattening the curve ahead of schedule and there are signs that we will be heading into a recovery sooner than originally expected.  The rate of new cases has now stayed below one per cent for seven days in a row.  These reports have given the public a renewed confidence as we have accepted that Stage 3 restrictions are now just a way of life for the time being.

So how is the Melbourne property market faring?

On the ground, we are not witnessing any significant price drops or distressed sales.  In fact, property prices are remaining stable with maybe a slight discount on some properties.  There are no doubt less buyers in the market, but on the flip side, there are also less sellers.  Good quality properties are still selling well and should continue to do so.  We secured three properties last week, but also missed out on three more due to being outbid by other buyers.  There is genuine activity but we are not seeing any runaway results like we saw a few months ago.

While stock levels remain low, property prices should remain stable or at worst, a very slight decrease in price.  The record low interest rates have made it easier for people to keep their properties without feeling too much pressure to sell.

The increased unemployment rate should only be temporary and once businesses start reopening, that rate will decline.  Whilst money is cheap, those employed buyers who are currently sitting on their hands, will in time be back looking to buy.  And for those buyers who are in the market, they are enjoying conditions of less buyer competition and more off market properties.

Have a great week!

Kim Easterbrook

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