With Victoria’s six-month rental eviction moratorium now extended for a further three months until the end of 2020, many potential investors may be questioning whether now is a good time to buy property in Melbourne.
When the Victorian Government extended the ban on rental evictions in August, the Real Estate Institute of Victoria (REIV) issued a statement saying that landlords were “being left behind and all but forgotten as the government makes decisions on financial support for people impacted by the economic downturn”.
“The decision to extend the rental moratorium to 31 December 2020 without proportionate attention to the landlord’s distress is one such example,” REIV stated.
“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.”
But with Melbourne property prices falling, could this be the best moment to buy?
At the beginning of October, CoreLogic reported that Melbourne housing values had decreased by 5.5 per cent since peaking in March.
By November, CoreLogic reported a further decline of 0.2 per cent for October, bringing the total decline down to 5.6 per cent since March. This is amid every other capital city in Australia experiencing slight gains in housing values in the same month.
But this number alone doesn’t paint a complete picture. ABC News noted a disparity in the decline of Melbourne house prices versus unit prices. While the price of homes in Melbourne had declined by 6.7 per cent, the price of units, including apartments, had only declined by 3.3 per cent.
Australians are still confident about buying investment property, survey reveals
Recent research conducted by the ING Group has revealed that many Australians are still confident in property investment.
Out of the 2,000 Australians that were surveyed, 26 per cent believed that now is the time to buy investment property to safeguard the future.
Further, 44 per cent of respondents saw property as the strongest investment option.
The survey found that during the COVID-19 pandemic, 37 per cent of respondents were saving more and 40 per cent were spending less.
Forty-four per cent of Australians and 50 per cent of millennials said they felt positive about buying an investment property, listing low interest rates (32 per cent) and the prospect of lower house prices (27 per cent) as reasons to buy an investment property.
ING Head of Home Loans Julie-Anne Bosich said the research suggests COVID-19 “has left many Aussies cautiously thinking about how they can invest to take greater control of their financial future”.
“While, understandably, not everyone is in a position to use their finances to invest, our research has found that for those who are, the preferred investment choice is property, especially in the current climate where interest rates are at a record low,” Ms Bosich said.
Buy now, or wait?
While it is difficult to speculate what will happen in the future, particularly since the COVID-19 pandemic, industry experts seem to be confident that the downturn in Melbourne property prices will soon end.
ANZ has now reversed its “pessimistic” forecast that Melbourne house prices would face a 15 per cent peak-to-trough decline by 2021.
“The housing sector is turning a corner”, ANZ Economists Felicity Emmett and Adelaide Timbrell said.
“After falling since April, national house prices were flat in October and look set to rise over coming months.”
The pair forecast that Melbourne property prices will rise by 7.8 per cent next year.
CoreLogic Head of Research Tim Lawless is equally confident. He said that “extremely low listing numbers help to insulate housing values” and believes we will see housing prices in Melbourne rising even before the end of this year.
“It looks like buyers, as well as sellers, are back in the marketplace,” he said.
Is it time to get in quick?
Since the easing of restrictions in Melbourne, the number of properties coming onto the market has soared.
CoreLogic reports that in the four weeks leading up to 18 October, the number of new property listings increased by 330 per cent, from 1,606 new listings in the four weeks up to 20 September to more than 7,000.
But it appears this surge in property listings has been accompanied by an even greater increase in demand. Domain.com.au recently reported that many buyers are now having difficulty finding a new home.
Domain Senior Research Analyst Dr Nicola Powell said that “stock is being absorbed at a greater rate than new stock is coming onto the market”.