Australia’s housing market dipped 0.4 per cent in August as capital city markets began to diverge, with three recording an increase in prices.
Also read: The hidden factors driving house prices
Melbourne fell the furthest, down 1.2 per cent as the city’s coronavirus lockdown set in, while Sydney fell 0.5 per cent and Brisbane 0.1 per cent.
Adelaide and Perth didn’t change in value, while Hobart values increased 0.1 per cent, Canberra increased 0.5 per cent in value and Darwin home values soared 1.0 per cent higher.
This marks the fourth consecutive monthly value fall across the Australian housing market.
CoreLogic head of research Tim Lawless said Melbourne’s figures demonstrate the impact of the worser viral outbreak, together with the fallout from stalled international migration. Since Covid-19 hit Australia, Melbourne’s home values have sunk 4.6 per cent.
Continuing, Lawless said the other cities’ figures show how housing markets are linked with social distancing rules and border policies.
“[These policies] have a direct effect on labour market conditions and sentiment. It’s not surprising to see Melbourne as the weakest housing market considering the extent of the virus outbreak, and subsequent restrictions, which have weakened the economic performance of Victoria,” Lawless said.
“Looking forward we are likely to see a diverse outcome for housing markets around Australia, depending on how well the virus is contained and the regions’ exposure to other factors such as its reliance on overseas migration as a source of housing demand.”
Regional markets have held up better than their capital city markets, with no change in values recorded over August. Similarly, while capital city markets were down 2.1 per cent over the quarter, regional markets moved only 0.2 per cent lower.
Lawless said the different support factors are at play, with regional markets not as heavily influenced by international migration.
“Regional markets may also be appealing for their relatively low density and lower price points. The normalisation of remote work through the pandemic could make proximity to major cities less of a factor in home purchasing decisions.”
But a ‘catalyst’ could be on its way for the Australian property market
While Lawless said August’s figures represent a slowing in the decline and improvement in some markets, challenges lie ahead.
“Through the Covid-19 pandemic to-date, active listing numbers have remained extremely low, demonstrating both a lower than average amount of fresh stock being added to the market, and a strong rate of absorption. So far there has been no evidence of urgent or distressed listings starting to pile up,” Lawless said.
“This could potentially change however as fiscal support starts to taper at the end of September and distressed borrowers taking a repayment holiday reach their six month check-in period around the same time.”
JobKeeper and JobSeeker payments are due to reduce in size from late September, with ANU analysis warning this will tip 740,000 Australians into poverty.
“The timing of these two events could be the catalyst for a gradual rise in distressed listings which will be an important trend to monitor,” Lawless said.
“If we do see active listing numbers rising to be higher than previous years, it could signal that vendors will need to offer up greater discounts in order to sell their home.”
The Reserve Bank of Australia will hold its monthly board meeting today, ahead of the June quarter’s National Accounts figures on Wednesday.
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