The impacts of the second lockdown in Melbourne's auction market are already manifesting, but a quick recovery is expected once the restrictions are lifted, according to CoreLogic.
Melbourne and Mitchell Shire went into a six-week lockdown following a sudden increase in COVID-19 cases. Over the week ending 19 July, Melbourne's clearance rate fell to 43.8%, reflecting a similar trend seen in the first round of restrictions.
Eliza Owen, head of residential research at CoreLogic, said the first familiar downtrend Melbourne witnessed was the significant increase in the share of properties withdrawn from auctions.
During the initial period of the first lockdown, 64.7% of scheduled auctions in Melbourne were called off. As of the week ending 19 July, the withdrawal rate rose again, albeit at a slower pace of 42%.
"The increased incidence of withdrawn auctions makes sense given the need to respond to lockdown conditions, especially where auction campaigns typically last four weeks, but there is a relatively short period of time between the announcement and enforcement of lockdowns," Owen said.
As a result of the high rate of withdrawn properties, clearance rates and auction volume decline. Owen said the withdrawal indicates the reluctance of sellers to test the auction environment under the lockdown.
"The physical restriction on auctions, as well as dampened consumer sentiment, will likely see auction volumes fall further in the coming weeks," she said.
However, the negative shocks unfolding during the second lockdown appear to be less severe than those in the first. Owen said the adoption of online sales methods made real estate agents and auctioneers more prepared to pivot towards a virtual auction environment.
"Furthermore, despite high levels of uncertainty, it is also interesting to see how quickly the auction market has rebounded as auction resumed across Victoria," she said. "If the last phase of lockdowns was anything to go by, the auction market and, more broadly, housing market activity, is likely to recover as restrictions are eased or lifted."
