Although the effects of the COVID-19 pandemic are still being felt, some regions are recovering more slowly than others. Melbourne’s economy was severely disrupted by one of the longest lockdowns ever experienced worldwide. The city’s residents faced high levels of financial pressure and anxiety due to restricted movement and economic activity, leading to a drop in buyer confidence that has yet to return to pre-pandemic levels.

Melbourne’s property market has historically been driven by its robust population growth. However, during the pandemic, the city saw a significant decrease in population growth. International migration halted, and many residents left for regional areas or other states in search of more space and a different lifestyle. This demographic shift has reduced housing demand, slowing down the market’s recovery.

The economic consequences of the pandemic should not be overlooked. Many potential home buyers are facing difficulties due to job loss and reduced income. Despite government assistance, ongoing economic concerns continue to significantly impact buyer sentiment. Additionally, rising interest rates have added another layer of complexity, increasing the cost of borrowing and making it more challenging for prospective buyers to secure loans.

The pandemic has also shifted what buyers seek in a home. Properties with more indoor and outdoor space, accommodating remote work and other lifestyle changes, have become highly valued. This trend has led to increased demand for homes in the suburbs and surrounding areas, rather than inner-city apartments, resulting in varied recovery rates across different market segments.

Another factor slowing Melbourne’s property market recovery is the disruption to global supply chains and local construction delays. Builders are facing increased costs and delays in obtaining materials, which has slowed the completion of new homes. This lag in new housing supply is contributing to the overall slower market recovery.

Government policies and incentives play a crucial role in shaping the housing market. While various schemes have been introduced to assist first-time home buyers and stimulate the market, their effectiveness has varied. The recent tightening of lending standards to ensure financial stability has made it more challenging for some buyers to obtain financing.

Despite these challenges, there are signs that the Melbourne property market is gradually stabilising. Ongoing infrastructure projects, improvements in the rental and sales sectors, and a boost in buyer confidence are driving a sustained growth outlook.

Are you looking to enter the real estate market? Feel free to get in touch with our team at Createvic Real Estate. Explore our current listings and for more tailored services, fill out our contact form.

Source: Realestate.com.au – Why the Melbourne Property Market is Taking Longer to Bounce Back