- National property market on 'recovery trend' trajectory
- Canberra and Hobart sit at record high values
- Low interest rates set to continue positive impact
- Continued border closures will have downward effect
- Inner-city Melbourne rental markets at most risk
- Some volatility will continue, but outlook positive overall
As the world stopped – in shock – as the global pandemic took hold in March 2020, many observers worried about what was in store for the economy and life generally. Let alone the property market.
Evidence from Core Logic’s annual Property Report suggests that despite Australia’s first official economic recesssion (defined as two successive negative quarters of economic growth) in 28 years, property values “have been resilient”.
“As of November, Australian housing values were 1.1% higher over the year, with an estimated total value of residential real estate recorded at A$7.2 trillion.”
“While the initial shock of COVID-19 led to a -2.1% decline in national property values between April and September, the trajectory of dwelling values began to recover through to November.”
The report, mainly written in November 2020, says that early data for December is showing a continuation of this trend.
Low interest rates, deferred mortgages, support for low income households, and other government support have greatly assisted the property market in showing strength amid the backdrop of an unprecedented global shock.
The high end of the market also held firm, and generally the property market has been far less volatile than, say, the stock market.
That’s not to say everything was a bunch of roses. Unit prices in Melbourne, one of the worst hit areas for the virus, fell 3.4% between March and September 2020.
Meanwhile, the so-called ‘race out of the city’ – much heralded in the media – led to strong property price growth in some regional areas. Regional areas saw prices grow +5.7% as compared to urban markets of +2.4%.
It’s in the rental market where there has been most variety across the country. With an almost total drying up of overseas entrants looking for rental properties in Melbourne, Sydney and Brisbane, there was a “different dynamic” in rental markets in Perth and Darwin.
As investors had long since deserted some markets due to very low rental yields, some rental markets began to tighten. The mining town of South Hedland in far north Western Australia saw “the highest rental yields for units across the country”. Perth rents rose 8.2% over 2020.
Current relatively higher demand for dwellings, the easing of the COVID pandemic emergency and continued low interest rates have led to an almost elastic band reaction, springing back into one of the hottest property markets for a while.
First home buyers are back, investors – in some paces – are back, and this seems to counter the far lower levels of migration-fuelled population growth that can also feed into prices and activity.
It may be time to make hay while the sun shines.