Melbourne lockdown to send population and property prices plummeting

author-avatar By on September 09, 2020
Melbourne lockdown to send population and property prices plummeting

Photo by Madeline Ong on Unsplash

Tens of thousands of people are set to relocate from Melbourne as a result of lockdowns, which will drive property prices down by double-digits.

That's according to national buyer's agency Propertyology, which has forecast a major transfer of housing demand away from the Victorian capital in the next couple of years, creating beneficiaries elsewhere. 

Propertyology’s Head of Research Simon Pressley said a weakened job market and fear of lockdowns would see a rise in interstate and intrastate migration. 

“Whether they relocate to a nearby Victorian regional location such as Bendigo, Wodonga, the Great Ocean Road region or whether they completely leave the state, thousands of Melburnians will take action to regain their freedom," Mr Pressley said.

"Prolonged uncertainty for one’s income is unsustainable. Lockdown is no lifestyle!”

Looking to compare low-rate, variable home loans? Below are a handful of low-rate loans in the market.

Lender
Advertised rate Comparison rate Monthly repayment Rate TypeOffsetRedrawOngoing FeeUpfront FeesLVRLump Sum RepaymentAdditional RepaymentsPre-approval

VariableMore details
LIMITED TIME OFFER

Smart Booster Home Loan Discounted Variable - 2yr (LVR < 80%)

  • Fast turnaround times, can meet 30-day settlement
  • For purchase and refinance, min 20% deposit
  • No ongoing or monthly fees, add offset for 0.10%
LIMITED TIME OFFER

Smart Booster Home Loan Discounted Variable - 2yr (LVR < 80%)

  • Fast turnaround times, can meet 30-day settlement
  • For purchase and refinance, min 20% deposit
  • No ongoing or monthly fees, add offset for 0.10%
VariableMore details
100% FULL OFFSET ACCOUNTNO APPLICATION FEE OR ONGOING FEES

Low Rate Home Loan - Prime (Principal and Interest) (Owner Occupied) (LVR < 60%)

  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services
100% FULL OFFSET ACCOUNTNO APPLICATION FEE OR ONGOING FEES

Low Rate Home Loan - Prime (Principal and Interest) (Owner Occupied) (LVR < 60%)

  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services
VariableMore details
REFINANCE IN MINUTES, NOT WEEKS

Nano Home Loans Variable Owner Occupied, Principal and Interest (Refinance Only)

  • Refinance only. Fast online application
  • No Nano fees. Free 100% offset sub account
  • Mobile app, Visa debit card & instant payments
REFINANCE IN MINUTES, NOT WEEKS

Nano Home Loans Variable Owner Occupied, Principal and Interest (Refinance Only)

  • Refinance only. Fast online application
  • No Nano fees. Free 100% offset sub account
  • Mobile app, Visa debit card & instant payments
VariableMore details
YOU COULD WIN $100k TO PAY DOWN YOUR LOAN*

Owner Occupier Accelerates - Celebrate (LVR < 60%) (Principal and Interest)

  • For a chance to win $100K towards your home loan, apply with Athena before Oct 31 & be approved by Dec 15
  • We lower your rate based off how much you’ve paid down your loan
  • Automatic rate match
YOU COULD WIN $100k TO PAY DOWN YOUR LOAN*

Owner Occupier Accelerates - Celebrate (LVR < 60%) (Principal and Interest)

  • For a chance to win $100K towards your home loan, apply with Athena before Oct 31 & be approved by Dec 15
  • We lower your rate based off how much you’ve paid down your loan
  • Automatic rate match
VariableMore details
AN EASY ONLINE APPLICATION

Yard Home Loan (Principal and Interest) (Special) (LVR < 70%)

  • Unlimited additional repayments
  • Unlimited free redraws
  • Optional 100% offset can be added for $120 p.a.^
AN EASY ONLINE APPLICATION

Yard Home Loan (Principal and Interest) (Special) (LVR < 70%)

  • Unlimited additional repayments
  • Unlimited free redraws
  • Optional 100% offset can be added for $120 p.a.^

Rates correct as of October 26, 2021. View disclaimer.

Even prior to COVID-19, Propertyology ranked Melbourne and Sydney property market fundamentals inferior to most other capital cities, and the pandemic has only accelerated this downgrade pattern. 

“They are the most vulnerable to the loss of international tourists and international students, they are the two most reliant on overseas migration, they have the highest mortgages to service, and the greatest risk of disruptions because they have the highest population density,” Mr Pressley said.

“For as long as this germ is on planet earth, the property markets of Australia’s two biggest cities will always be the most vulnerable to COVID-19.”

As many as 30,000 to leave Melbourne 

Victorian Premier Daniel Andrews announced yesterday that Melbourne's hard lockdown would be extended to 26 October, which Mr Pressley said had caused Propertyology to adjust their forecasts for the city. 

“Very low real estate resale volumes, near-zero interest rates and federal government income support packages provide a solid floor for property markets nationally. But Melbourne is now an exception to this rule,” he said. 

Propertyology is forecasting one of the biggest swings in internal migration by any Australian city ever, with the 112-day lockdown crippling the city's economy for years. 

“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," Mr Pressley said.

"It is highly possible that it could lose as many as 30,000 people over the next couple of years." 

As a result, regional Victorian locations are set to be the beneficiaries of this housing demand, with many locations having tight housing supply and affordable real estate.

"Regional Victorian locations like Bendigo have consistently attracted large volumes of internal migration for many years," Mr Pressley said.

"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.”

simmomelbs01

Melbourne a stark contrast to the rest of Australia 

Mr Pressley said the rest of the country was a stark contrast to both Melbourne and Sydney, with Propertyology observing upward pressure on property prices and rents. 

“Job advertisements have spiked, the glorious spring weather has arrived, and people are getting on with their lives,” he said. 

“First home buyer activity is running at record-pace, the HomeBuilder stimulus package is very popular and existing homeowners are cashing in on low interest by upgrading.

"Agents don’t have enough stock to sell, causing regular multi-offer situations and price acceleration.”

Mr Pressley added well-informed property investors recognised large parts of Australia have incredibly low rental supply, yields of around 5%, and a positive growth outlook.


Disclaimers

The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered which includes retail products from at least the big four banks, the top 10 customer-owned institutions and Australia’s larger non-banks:

  • The big four banks are: ANZ, CBA, NAB and Westpac
  • The top 10 customer-owned Institutions are the ten largest mutual banks, credit unions and building societies in Australia, ranked by assets under management in November 2020. They are (in descending order): Great Southern Bank, Newcastle Permanent, Heritage Bank, Peoples’ Choice Credit Union, Teachers Mutual Bank, Greater Bank, IMB Bank, Beyond Bank, Bank Australia and P&N Bank.
  • The larger non-bank lenders are those who (in 2020) has more than $9 billion in Australian funded loans and advances. These groups are: Resimac, Pepper, Liberty and Firstmac.
  • If you click on a product link and you are referred to a Product or Service Provider’s web page, it is highly likely that a commercial relationship exists between that Product or Service Provider and Savings.com.au

Some providers' products may not be available in all states. To be considered, the product and rate must be clearly published on the product provider's web site.

In the interests of full disclosure, Savings.com.au, Performance Drive and Loans.com.au are part of the Firstmac Group. To read about how Savings.com.au manages potential conflicts of interest, along with how we get paid, please click through onto the web site links.

*Comparison rate is based on a loan of $150,000 over a term of 25 years. Please note the comparison rate only applies to the examples given. Different loan amounts and terms will result in different comparison rates. Costs such as redraw fees and costs savings, such as fee waivers, are not included in the comparison rate but may influence the cost of the loan.

Latest Articles

author-avatar
Alex joined Savings.com.au as a finance journalist in 2019. He enjoys covering in-depth economical releases and breaking down how they might affect the everyday punter. He is passionate about providing Australians with the information and tools needed to make them financially stable for their futures.

Be Savings smart.
Subscribe for free money newsletters.

By subscribing you agree to the Savings Privacy Policy