According to property analytics company CoreLogic, the second round of lockdown in Melbourne (which came into effect at midnight on 8 July) has resulted in a higher withdrawal rate in the past few weeks, but the prospects aren’t as gloomy as they when the coronavirus first forced lockdown in the city in March.
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 51.2 per cent, dropping to 43.7 per cent in the second week (ending 19 July).
However, CoreLogic notes that the first round of lockdown saw withdrawal rates peak at a much higher level (64.7 per cent) across Melbourne – largely due to a ban on physical attendances at auctions. This also led to a spike in the number of properties sold before auction.
This time around, the withdrawal rate has reached 42 per cent, and more properties are now being sold via online auctions.
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 analysts noted.
There are 558 Melbourne homes scheduled for auction this week, an expected rise of 11.6 per cent on last week’s volumes (500), which saw a large number withdrawn (209).
[Related: Melbourne lockdown to drag clearance rates]
Annie Kane is the editor of The Adviser and Mortgage Business.
As well as writing about the Australian broking industry, the mortgage market, financial regulation, fintechs and the wider lending landscape – Annie is also the host of the Elite Broker and In Focus podcasts and The Adviser Live webcasts.