How have global property markets bounced back after lockdown?

The tougher the lockdown, the quicker the bounce back for the property market, an analysis of listings in cities around the world has shown.

New property listings in Australia, New Zealand, the UK and the US all fell significantly during respective lockdowns, but the rebound has varied depending on the severity of the restrictions, the analysis by Domain showed.

In New Zealand and the UK, where lockdowns were strict and all but shut down the housing market, the rebound in listings and sale volumes was “unseasonable”, Domain senior research analyst Nicola Powell said.

“You’ve got this snowball effect where the longer the lockdown, the more people are waiting to transact, so the rebound is stronger,” Dr Powell said.

Melbourne, too, has seen a rapid rebound in listings since stage 4 restrictions for real estate, which banned in-person inspections, started easing in early October.

Domain data showed weekly listings dropped by as much 70 per cent during the most recent lockdown – compared with the 40 to 50 per cent drop seen by most Australian capitals during the stage 3 restrictions earlier in the year.

By October 4, they had bounced back by a whopping 241 per cent from the previous week.

“This recovery is stronger than any Australian city post-lockdown in May,” Dr Powell said.

In the US, where COVID-19 lockdowns had been generally more lenient, listings in capital cities still saw a significant drop to April, but did not bottom out completely. They slowly rose over 12 weeks to where listing numbers were last year – much different than the swift jumps seen in other countries.

“If you have a semi-lockdown, some people are more game to transact,” Dr Powell said.

She said the lower pent-up demand to buy and sell in the US meant the rebound was slower, though New York was a notable exception – listings there jumped much higher than they were in July 2019.

Knight Frank partner and head of residential research Michelle Ciesielski said many cities were largely affected by not only the length and severity of lockdowns, but by the state of the housing market prior to COVID-19.

“In many countries they have been able to pick up where they’ve left off,” Ms Ciesielski said.

AMP Capital chief economist Shane Oliver said the effect was similar to the change in retail sales – which dropped off during lockdowns when people could not leave their homes, spiked once restrictions eased, and then levelled off over time.

“The rebound in a way doesn’t tell you the market is taking off again, it’s just getting back to normal,” Dr Oliver said. “The big unknown is will the new normal be dragged down by lingering effects of the recession?”

He said although it had not been a “normal” recession, the end of mortgage holidays and government support could see more people needing to sell, potentially pushing prices down.

The other factor affecting the large number of transactions and listings post lockdown was people looking for a lifestyle change in the wake of COVID-19, Dr Oliver said.

“You’ve got the desire to leave the city – that creates its own level of activity,” he said.

Ms Ciesielski said although there had been an “up-tick” in people buying larger houses in regional areas or on the outskirts of large cities, a Knight Frank Global survey in May showed there was still an appetite for inner-city apartments.

“Interestingly, those that were looking to buy an apartment as their next purchase – 50 per cent had not changed their position.”

She said as people started to work from the office again, the desire to live very close to work would become more common.

“It’s a temporary pause – there’s going to be a return to the office,” she said. “There will be those who prefer no public transport contact and will take advantage of the walk or cycle to work.”

Dr Powell said areas with harder lockdowns had seen more people turning to regional or outer suburban living, though there would come a time where cities were back in favour.

“There is this aspect of human behaviour where we want to stay connected – we’re not all going to be moving to the back of beyond.”

But, she said, she still expected to see an “off-loading” of inner-city apartments in the months ahead.

She said other factors, including a 12-month abolition of stamp duty in the UK, government grants in Australia and record low interest rates were also incentives for people to buy.

“You can understand why people are thinking now is the right time to make their move.”