Q – How is the second wave of stage 3 restrictions in Melbourne likely to affect the market?
Having successfully navigated the initial wave of restrictions we are confident that this second phase will see the Melbourne market continue to function as normal and we will continue to achieve strong results for our clients.
Frank Gordon worked every day of the last lockdown. We developed new ways of working with increased social distancing and hygiene practices which have remained in place. With five decades of local Bayside experience, we are well versed in adapting to changing market conditions. We achieved strong sale and rental results in Port Melbourne and South Melbourne during the last lockdown and will continue to do so in this one.
What does this mean for sales?
Prior to the second lockdown, the market seemed to be on the rise. The Melbourne clearance rates leading up to the lockdown were 62%, 60% and 54% showing a consistent increase in buyer confidence week on week.
Looking at prices the lack of stock continues to protect prices. We have seen some modest, and much smaller than predicted changes to property prices. According to CoreLogic data (June 26) dwellings valued in the top quartile (above $959,900) had declined by 1.3% over May, compared to a 0.6 decline in the middle market and 0.3% in the lowest quartile.
We continue to sell properties, with increased investment in video, email, social and digital marketing. Having had great success with private sale and expression of interest last lockdown all of our existing auction campaigns have been switched to these methods.
Inspections are being held each day via private appointment. This has been an interesting change as it has allowed us to hone in on the highly active buyers who are ready to make a move.
What does this mean for the rental market?
Melbourne’s rental market has stabilised to some degree, but it remains a tenant’s market with one in four rental listings being discounted in order to attract a tenant according to Domain.
Job losses due to closures of businesses as well as interstate and international border closures have weighed heavily on the Melbourne rental market. In terms of rental value, the Domain Rent Report released Thursday revealed that unit rents have fallen by 3.5% and house rents by 2.3% across Melbourne.
Looking across to vacancies the same Domain report revealed that advertised rentals between March and June jumped by a whopping 64 per cent compared with the same time last year.
Frank Gordon continues to hold a lower than average vacancy rate. We keep a close eye on the market, price our properties accordingly, and keep in touch with tenants looking to move into the area. This helps us proactively target prospective tenants, and also cross-promote our properties, bringing a tenant from one property across to another when they find the first unsuitable.
The residing message for both landlords and tenants remains the same. We need to continue to work together, support each other, and negotiate personal arrangements to get us through for this challenging period.
During the last lockdown, approximately 12% of our landlords generously reduced their rent for tenants experiencing financial hardship. Colloquially speaking this seems below the average of other local agencies in the Port Melbourne, St Kilda and city market, with other agents estimating roughly 20% – 30% reductions.
We expect that this latest lockdown could result in more rent reduction requests as well as requests to extend the existing reduced rental agreements in some cases. We ask for your patience and understanding during this time as we work on finding a mutually agreeable arrangement for each party.
If you have any questions please feel free to reach out to us at 9645 2411.
How we’re adapting our practices – https://www.frankgordon.com.au/community/safe-and-secure-practices/
Landlord frequently asked questions – https://www.frankgordon.com.au/news/coronavirus-landlord-information/
Tenant frequently asked questions – https://www.frankgordon.com.au/news/coronavirus-tenant-info/