“A hard lockdown of more than 100-days will be the cause of the biggest shock to Melbourne’s economy that most of its residents have ever seen. It is highly possible that it could lose as many as 30,000 people over the next couple of years,” said Propertyology’s Head of Research.
Tens of thousands of people are likely to relocate away from Melbourne over the next couple of years as part of the Victorian government’s unintended consequences that will include double-digit property price declines, according to Propertyology.
The property market analysts and national buyer’s agency firm has adjusted its outlook for Melbourne real estate in direct response to the Victorian state government’s lockdown plan for the city’s second Covid wave.
Propertyology is forecasting a major transference of housing demand with thousands of residents migrating away from Melbourne over the next couple of years, creating beneficiaries elsewhere.
Sunday’s announcement by Premier Dan Andrews to extend Melbourne’s hard lockdown to 26 October prompted Propertyology to adjust its forecast. They had originally anticipated that Melbourne’s property market would hold firm.
Propertyology Head of Research, Simon Pressley, said they are concerned that many Melbourne business owners won’t be able to hold on through a 3.5-month hard lockdown.
“It’s very sad. It’s Propertyology’s view that the Victorian state government’s handling of the hotel quarantine situation and the subsequent decision to enforce a 112-day city lockdown will cripple Melbourne’s economy for several years.”
Mr. Pressley said he would not be surprised if Melbourne’s internal migration data a couple of years from now reflected a (net) loss of as much as 30,000 people over the next two financial years.
Prior to Melbourne’s last property boom, its local economy was soft resulting in its population losing 20,000 people to internal migration over the 5-years ending June 2012.
Similarly, Perth’s economic downturn flipped its earlier population boom on its head, losing 21,000 people to internal migration over the 4-years ending June 2019.
He said that property markets look much healthier in the rest of Victoria where housing supply is very tight, real estate is affordable and local economic profiles have reduced Covid vulnerability. They will be among the beneficiaries of the transfer in housing demand.
“Regional Victorian locations like Bendigo have consistently attracted large volumes of internal migration for many years. Cities like this offer great lifestyles, incredibly affordable housing, it’s a quick train trip back when someone needs to go to Melbourne, and their economic profile is less vulnerable to Covid.”
Some residents who do relocate will want to remain close enough to Melbourne and others will cast their net right across Australia.
“Just last week, while explaining the strong buyer activity in Hobart to me, a real estate agent down there told me a story of about a property with multiple offers and the successful buyer was a couple from Melbourne who purchased it sight-unseen with the intention of relocating away from Melbourne,” the buyer’s agent said. [contact us to organise an interview with the real estate agent]
Mr Pressley said that property markets in Melbourne and Sydney are in stark contrast to what is happening right across the rest of Australia. Their buyer’s agency has observed upward pressure on (both) property prices and rents in many locations across Australia.
Propertyology remains confident that most Australian property markets have a better than average chance of producing growth in asset values in the year ahead.