Housing Prices Hold Up Despite Covid-19 Plus Other Positive Trends
There is a lot of doom and gloom in the media about the impact COVID-19 is, or could have, on the Australian property market. But currently there is a lot of good news out there too. Housing prices are holding up, the banks are assisting borrowers and most people are not in a position that they need to sell.
To help you understand the broader picture here is a look at some of the positive trends we are seeing from the market analysts.
National property values up year on year
Although housing values are currently slipping or stabilising between April and June, national property values remain 7.8% higher than they were a year ago 3. What this means for our capital cities is:
- Sydney is up 13.3%.
- Melbourne is up 10.2%
- Brisbane is up 4.4%
- Adelaide is up 2%
- Perth is down by 2.5%
- Hobart is up 6.4%
- Darwin is down by 1.5%
- Canberra is up is up 6.3%
Interestingly regional markets have been more resilient to value falls with the combined regional index holding pretty firm through June.
Consumer sentiment is rising
According to Westpac’s MI index, consumer sentiment has rebounded 16.4%1 from April to May, followed by a further 6.4%3 rise through June, as a flow on effect of the easing of COVID-19 restrictions1. With consumers feeling more confident, households are better equipped to make high commitment decisions such as buying or selling a home.
In addition to this, Australians who opted for mortgage deferments at the beginning of COVID-19, are resuming their loan repayments sooner than expected. ANZ Group Executive, Retail and Commercial, Mark Hand, reported that approximately one third of their deferred customers have recommenced their payments. This is another strong indicator that consumer confidence is rising, that homeowners feel they have some certainty going forward.
Improving seller confidence
In the month of May 8.1%1 more property advertisements were created nationally. Whilst the previous month recorded a historically low number of new listings, the upward trend is a positive sign.
Another good indicator seller sentiment is improving is from CoreLogic who state the number of real estate agents generating property reports for potential sellers on their platform, is up by 45%1 since the end of April and is 6% higher than this time last year3 This suggests sellers are beginning to dip their toe into the market once again.
Interestingly, the sales data shows there is a “healthy rate of absorption of properties” as they hit the market suggesting that buyers are actively snapping them up. Combine this with the upward trending auction clearance rates that jumped from 30.2% in late April to 62.7% at the end of May1, it is another confirmation point of improving conditions.
Buyers demand is returning
According to realestate.com.au, ‘home buyers across Australia have well and truly awoken from their COVID-19 slumber’2.
The REA Insights Weekly Demand Index measures how engaged buyers are on their website. How often do they view a listing? How many times is a listing shared? How many enquires are being sent to the agent, amongst other measures.
Over the last nine weeks, the number of highly engaged buyers visiting the realestate.com.au website has increased by over 100%2.
Why? There would be a number of factors influencing this trend:
- Limited stock on the market means serious buyers are narrowing their focus and spending more time assessing what is available
- Consumer sentiment is rising as mentioned above
- Record low interest rates makes buying a property appealing to people with stable employment and income
- Many people who had sold their property prior to COVID-19 are cashed up and ready to buy
- Government first home buyer and the HomeBuilder scheme have sparked massive new interest in building new homes and that’s great for our economy.
A Final Word
Whilst none of us have a crystal ball, positive comments from RBA Governor saying that our ‘economic downturn may not be as severe as earlier thought’, is a positive indicator that the property market along with our wider economy, may come out of COVID-19 faster and in a better shape than many thought.
Keep in mind the trends we have discussed in this article are from a national perspective. To find out how COVID-19 has impacted your property and neighbourhood, connect with your local McGrath Real Estate agent for an obligation free market update.
1 CoreLogic 1 June 2020 Release
2 REA Insights Weekly Demand Report
3 CoreLogic 1 July 2020 Release
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