Property market starting to show cracks as lockdown impact bites

by Mike Wood01 Oct 2021

The ongoing lockdowns have made a dent into the housing market in Australia, according to the latest figures released by conveyancing giant PEXA.

PEXA Insights showed that New South Wales and Victoria had seen their volumes and settlements fall in the quarter from July to September 2021, during which they were largely under restrictions, with Queensland, where lockdowns have been avoided, continuing apace.

Greater Brisbane and Surfers Paradise were the standout regions of Queensland, with New South Wales areas that avoided the bulk of the lockdowns, such as Port Macquarie, also holding up well.

“In New South Wales and Victoria, where we had extended lockdowns in the last quarter, there has been an impact,” said PEXA Insights head of research Mike Gill.

“In the previous four quarters, we were recording rises across all states but in particular New South Wales. It’s been growth in terms of the number of settlements and also the value of those settlements.”

“This quarter is the first that we’ve seen a decline in some time now. In New South Wales and Victoria, that’s been very much informed by those lockdowns. We’ve seen drops in volume: 4% on the previous quarter in New South Wales, 4.6% in Victoria.”

“But what I should say is that we’re in an interesting phase now. If we go back a year and compare to the lockdowns last year, the numbers are still well up. NSW is up nearly 30%, Victoria up nearly 33%.”

“What that tells us is that, while the lockdowns are having an impact, as we can see in the declines this quarter, buyers and sellers are still finding a way to transact.”

“Talking to agents, as we do to get a better understanding of what is happening on the ground, what we’re seeing is a lot of properties that were listed prior to lockdown have been sold. Buyers were able to get a chance to walk through and inspect properties and they’ve subsequently been sold.”

“As we go into lockdown and see new listings spring up, we have restrictions in Victoria where buyers couldn’t inspect properties and there were no in-person auctions either, so the properties that tended to sell in those scenarios were those that might have been knock-down, rebuilds or development land, which didn’t really require the buyer to physically go to the property.”

“We saw incidences of buyers who were willing to take the gamble and purchase sight unseen, but of course, that’s the exception to the rule. Those would have been buyers who were quite desperate versus your typical buyer.”

“We recorded up to the end of September, and we would expect to see declines in October due to the lagging effect. We’ll probably see that before we start to see volumes pick up again in the later parts of the month.”

The crucial exception to this data is Queensland, which has largely been untouched by lockdowns and has seen unprecedented growth. The lack of lockdowns is one aspect, but Queensland also began from a lower base and thus has more scope to grow quickly.

“It’s an impressive performance from the Queensland market, albeit coming off a lower base,” said Gill. “You could argue that there’s much more potential for growth.”

“But having said that, we’ve seen similar growth in New South Wales, though the lockdown has had seen impact in the recent months, so never say never with New South Wales.”

“Queensland’s story is really a standout, because for so many years prior to this current upturn, the market has been quite stagnant. There hasn’t been a growth in volume or in prices in Queensland, it’s a state that hasn’t benefited in the same way that Victoria and New South Wales did.

“There’s increased demand that hasn’t been dampened by any restrictions in terms of viewing or transacting properties, and that’s certainly played out well for Queensland. It’s a tremendous story for Queensland, and if you look at the historical trend, you could say it’s well overdue.”

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