Australia’s housing market has weathered the anticipated coronavirus storm much better than expected, with the Aussie property market still ranking 19th worldwide.
The forecast for the Australian housing market was bleak, with a study by the University of Melbourne warning of a decline in property prices that would last months, if not years.
Predictions VS. reality
The market has experienced some weakening, but the numbers are considerably more optimistic than the originally forecast of 4.4% by the University of Melbourne’s study.
According to CoreLogic’s latest data, the June quarter only saw a 1.6% drop Australia wide, with regional prices barely impacted.
Due to Melbourne’s prolonged lockdowns, it was unsurprisingly the worst affected city seeing a 3.2% drop, which was still less than the predicted numbers for the quarter.
Despite the Australia-wide decline, in the same period, Canberra’s property prices increased by 1.3%.
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A snapshot of Australian house prices
The latest numbers from the Australian Bureau of Statistics have revealed that Australia’s total housing stock lost a whopping $98.2 billion in the June quarter but has been restored to the numbers seen in the 2019 September quarter.
The bureau reported that even with this steady climb to normalcy, New South Wales buyers experienced a near $20,000 reduction in prices, with Victoria seeing similar numbers.
Those looking to purchase in Western Australia found the lowest housing prices since 2011.
Andrew Tomadini, Head of Prices Statistics at the Australian Bureau of Statistics (ABS), said: “All capital cities apart from Canberra had recorded falls in property prices in the June quarter 2020”.
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Auction activity and housing demand
Previous concerns over real estate supply and demand have been dampened, with an increase in real estate activity around Australia.
CoreLogic’s July index results outlined how coronavirus related restrictions and buyer trepidation led to a major dive in activity beginning in March, reaching a low of 60% by Easter.
In the months since, activity levels have increased steadily, returning to near-normal levels, with the number of new listings higher than this time last year.
The number of auctions also increased through May and June, but in recent months the national average was dragged down by Melbourne’s lockdown.
Despite Melbourne’s lag, Sydney’s minimal restrictions and steady market recovery have seen a 64% auction clearance rate in recent weeks.
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No two properties are the same
The effects of the coronavirus downturn have not been universal across different regions and kinds of dwellings, with some faring better than others.
PRD’S 2020 Economic and Property Report revealed that housing prices have declined further than detached dwellings, but it is expected that high rise and inner-city apartments will ultimately feel the brunt of the downturn as buyers look to move out of the city.
The shift to working remotely is changing Australian ownership goals, seeing large numbers migrating to regional suburbs to find a work-life balance.
As a result, PRD reported regional prices tripled the growth of capital cities in the first half of the year.
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What’s next for buyers?
According to Tim Lawless, CoreLogic’s head of research, as coronavirus supplements dry up over the coming months and home loan deferments come to an end, an increase in urgent sales is expected, placing further pressure on the market, possibly driving prices even lower.
“The longer-term outlook for the housing market is largely dependent on how well the economy is tracking when these support measures are removed,” he said.
Due to a glut in inner-city rentals and a decline in investor activity, the market is currently geared toward homebuyers looking in regional suburbs and investors with a long-term outlook.
The increase in auction clearance rates means that buyers need to act quickly, but can better their chance of success by being aware of all buying costs and gaining pre-approval.
With interest rates predicted to remain at record lows for the next few years, a slight dip in property prices, and financial incentives for first home buyers, this may be an excellent time to buy a house.
Words by Nell Matzen
- The impact of COVID-19 on Australia’s property market
- Residential property price indexes: eight capital cities, Jun 2020
- Australian housing values continue to drift lower, falling 0.6% in July as the COVID driven housing downturn moves through a third month of orderly decline.
- PRD Australian Economic and Property Report 2020
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