Property values fell slightly across the five major capital cities during June with markets in Canberra, Darwin and Hobart each recording a small increase. Core Logic reported a second consecutive month of falls with the national Home Value Index down 0.7% in June. Overall market activity showed improvement with a 21.5% surge in sales activity through May. Core Logic estimates that home sales in June were up a further 29.5%.
CoreLogic’s head of research, Tim Lawless, said “Downwards pressure on home values has remained mild to-date, with capital city dwelling values falling a cumulative 1.3% over the past two months. A variety of factors helped to protect home values from more significant declines, including persistently low advertised stock levels and significant government stimulus. Additionally, low-interest rates and forbearance policies from lenders have helped to keep urgent sales off the market, providing further insulation to housing values.”
Regional markets remain resilient in the current environment with a ‘tree-change’ trend emerging as city dwellers snap up acreage close to the city centre.
Meanwhile, the Federal Government’s Homebuilder program and the second intake of the First Home Loan Deposit Scheme are having a positive impact on the market.
Job market uncertainty and concern about the current economic outlook saw property values in Sydney fall slightly by 0.8% over June.
According to Core Logic, 644 homes were auctioned in Sydney week ending 28 June with a clearance rate of 62.9%; an increase on the previous week in which 61.6% of the 522 properties up for auction sold.
Core Logic also reports that the median time to sell in Sydney is currently 55 days for homes and 56 days for units with a 2.1% discount across the market.
As Sydney continues to exit lockdown and market confidence grows, it appears that inner suburban residents are more willing to list their home and buy back into the market. Predominantly high-rise inner-city residences and those in some outer suburbs are proving less resilient due to a lack of tourists and the exodus of migrant-workers returning overseas. REINSW data puts the inner ring vacancy at 5 per cent, the highest in 18 years.
There was a reintroduction of level 3 restrictions on open-for-inspections and public auctions in 36 suburbs in Melbourne’s inner north, west and north-west, following a spike in Covid-19 cases in those areas. Real Estate Institute of Victoria President Leah Calnan confirmed that the restrictions would be in force for the next four weeks. “Most agents are still running a blended approach to their auction campaigns,” said Ms Calnan. “Now it will mean that they will remove the on-site component and continue solely with their online platform for the next four weeks”.
According to Core Logic’s Home Value Index, Melbourne saw the largest decline in property values over June with a 1.1 per cent fall on the previous month.
Meanwhile, Domain economist Trent Wiltshire believed new listings and transaction volumes would continue to rise in the city, albeit at a slower pace with prices remaining sluggish. “Prices in Melbourne are probably the most likely to fall furthest,” he said. “Inner Melbourne had more investors and bigger job losses, it’s more reliant on migration and international students and tourism, so all these factors have weighed on the Melbourne market more so than most other capital,” he said. “What’s happened there the past week is another factor that could push prices lower”.
Brisbane house prices fell 0.4 per cent over the month. A total of 90 properties were auctioned in the last week of June with a clearance rate of 40.7%.
Border closures and lack of tourists are beginning to have an impact on the market with the Australian Bureau of Statistics reporting that apartment approvals have hit an 11 year low, down 7.4% in May. Approvals on private sector houses are down 9.9 per cent, the highest drop in the country.
Brisbane residents are embracing the ‘tree-change’ trend. Tyson Clarke from Sotheby’s International advised that “inquiry levels for luxe acreage properties have surged”, with property close to the city the most sought after. Regional hotspots such as the Sunshine Coast, Mackay and Gympie are all performing well with an average price increase of around 4% according to Canstar.
The Housing Industry Association WA has forecast a “bounce back in the building sector to pre-pandemic levels by next year”. According to the peak body, state and federal grants announced in June have seen a 132% rise in consumers visiting display homes. HIA WA Executive Director Cath Hart said “this forecast showed a solid recovery for residential building in WA. We now expect 15,950 dwelling starts in WA in 2020/21”.
Following a 1.1 per cent decline in property value over June, Eliza Owen, Head of Research at Core Logic, suggested that “the loss of jobs and income had created a bit of a shock to the market” in Perth. Only 19 properties were auctioned in Perth in the last week of June with a clearance rate of 47.06 per cent.
Canberra was the best performing capital city throughout June with an 84.4 per cent auction clearance rate in the last week of June. Property values were up by 0.1 per cent over the month.
The overall auction clearance rate for June was 72 per cent in the countries capital; a 10 per cent increase from May and up from the April low of 45 per cent. Year-on-year, the June 2020 result was substantially higher than the 47 per cent result in June 2019. However, while clearance rates seem to have rebounded, it’s worth noting that auction volumes remain weak.
Core Logic’s Home Value Index showed a drop of 0.2 per cent in Adelaide’s median dwelling price, the lowest fall across the country, and following small increases in March, April and May this year. Brett Roenfeldt, the President of the Real Estate Institute of South Australia, said the result proves “our market is still very steady. We’re not getting the real drag down of the market price-wise, we’re holding up very well. If we had a huge injection of stock though, you could well find some severe adjustments”.
Despite the pandemic’s impact on the market, some suburbs are still recording strong growth. According to realestate.com, in the 11 months to May 2020, Glenelg North and Henley Beach have recorded a year-on-year increase of 23 per cent. North Adelaide, Mount Barker and Findon were also performing well.
The Darwin property market continues to defy the odds and remains resilient. Core Logic reports property value increases in every month since March 2020. Realestate.com advises that “buyer activity was thriving with demand exceeding supply for the first time in more than six years”.
The Northern Territory Government’s housing stimulus packages are also having a positive impact on the market with homeowners now choosing to renovate rather than sell, and former renters now choosing to buy.
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