- Due to lockdowns and restrictions, it is unlikely an elevated spring season will occur
- The decade to 2019 saw elevated new listings during spring compared to the other seasons
- If restrictions are lifted, a strong rebound may occur during summer, suggests CoreLogic
With spring less than two weeks away, it is fair to say the spring selling season will be altered significantly.
With the nation’s two largest cities and capital in lockdown, along with a raft of restrictions in other states and territories, sales and listings volumes will most likely not rise from September to November this year, as is common during spring.
Both buyer demand and property supply would (normally) increase during the season, meaning the seasonal impact would be marginal.
Data from CoreLogic shows the combined capital cities typically witness an 18.5% increase in the average number of new listings in spring compared to the total average.
In real terms, this equates to an average of 48,700 through the months of spring compared to 42,100 new listings for a typical month.
Sales, however, only saw a 7.8% increase in the combined capital cities – equating to 40,000 transactions during the spring months compared to 37,500 on average for all months.
The only indicators for how the lockdowns may impact the spring selling season is what is currently occurring in areas affected by a lockdown – and what happened last spring in Melbourne.
“Observing housing market performance through lockdowns reveals that both sales and listings volumes will fall through lockdowns,” said CoreLogic’s Eliza Owen.
“This means transaction activity is likely to be subdued across Melbourne, the ACT and NSW through the duration of the current lockdowns.”
Eliza Owen, CoreLogic
Greater Melbourne, which was subject to second wave restrictions from mid-July to late October 2020, saw a significant rolling 28-day decline of newly advertised property as seen in the chart below.
Rolling 28-day count of newly advertised property – Melbourne
A rapid and substantial reduction in new listings occurred during stage three and four restrictions that were below the five-year average.
Ms Owen said factors such as low levels of consumer confidence, mortgage repayment deferrals and government support – which limited distressed sales – and property being harder to transact contributed to this decline.
However, she noted a significant rebound occurred post-lockdown.
“As the easing of restrictions was announced towards the end of October, new listing volumes began to rise rapidly, showing the elasticity of vendor behaviour around restrictions. Newly advertised stock recovered remarkably quickly following the easing of restrictions. “
“Interestingly, new listings volumes through December 2020 trended an average 40.4% higher than the previous five-year average, suggesting the spring selling season of 2020 was ‘pushed back’ into the final months of the year.”
Subsequently, Ms Owen argued that elevated transaction activity may occur during the summer of 2021/2022 assuming restrictions are eased by then.
However, she said headwinds for the housing market must also be considered.
“Rising affordability constraints had already seen a downward trend in first home buyer activity since the start of 2021.
“Some arrangements that supported economic and housing conditions through 2020 lockdowns, such as JobKeeper and HomeBuilder, have not been re-surfaced this year for regions in lockdown, and may dampen the rebound in demand.
“Another factor to consider is the more uncertain nature of the delta variant, with this more contagious strain of the virus having the potential to make lockdowns more frequent until the vast majority of Australians are vaccinated. This could disrupt income streams, impacting the robustness of housing demand.”