Once Victoria was able to gain the upper hand over the corona virus the property market reciprocated in kind by bouncing back to the heady heights of early 2020. This is not great news for first home buyers however it is a testament to the resilience of the Melbourne property market and the Victorian economy in general.
The last two years has seen a lack of quality supply. I am confident this will change during 2021 with a greater amount of transactions occurring.
Unfortunately, once again we are seeing regular and substantial under-quoting by some selling agents. This may have been forgivable during 2020 due to the lack of transactions as it is difficult to accurately value a property without recent and comparable sales. There will be no excuse for this type of deceptive behaviour during 2021.
Due to the corona virus pandemic there has been a reduced number of auctions, so there are no meaningful clearance rates available. My observation is that the greater majority of quality properties that are going to auction are selling on the day.
Rental vacancy rates are on the increase. The proportion of vacant properties in metro Melbourne is around 4 per cent. The hardest hit segments are the high density towers in and around central Melbourne.
Following the Reserve Bank meeting in December 2020, the cash rate is at 0.1 per cent after a cut in November. The current rate is at an all time low.
According to the Australian Bureau of Statistics (ABS) gross domestic product (GDP) rose 3.3 per cent in the September quarter, as corona virus related restrictions eased across most states and territories. This follows a record 7.0 per cent decline in the June quarter 2020. While there was an improvement in GDP this quarter, the level of activity in the economy remains lower than prior to the pandemic, reflected in a 3.8 per cent decline through the year.
ABS shows the official unemployment rate fell in December to 6.6 per cent as 50,000 more people became employed,after unemployment reached a peak of 7.5% in July. Unemployment remains 1.5 per cent higher compared to December 2019.
The Consumer Price Index (CPI) rose 1.6 per cent in the September quarter. Over the twelve months to the September quarter the CPI rose 0.7 per cent. This followed a drop of 0.3 per cent year-on-year in quarter 2, 2020.
There is currently a lot of pent up demand for quality Melbourne property. This is especially the case below the two million dollar price bracket. The recent turbulent times created by the corona virus has been negated by record low interest rates combined with unprecedented government assistance to property buyers, mainly in the form of stamp duty discounts.