Australian housing values drop by 0.6% in July.
The impacts of COVID have continue as July saw the third month of decline, recording a national decrease of 0.6% according to the latest CoreLogic data.
Two of the capital cities showed an improvement with Canberra increasing by 0.6% and Adelaide 0.1%. Melbourne suffered the sharpest decline shrinking by 1.2% followed by Sydney 0.9%. The decrease is a slowing from the 0.7% decrease in June. Regional markets managed to remin unchanged.
Locally Perth dropped by 0.6%, leaving the median value down to $439,092.
The COVID impact on the market has not been as harsh as anticipated, Tim Lawless, CoreLogic’s head of research “The impact from COVID-19 on housing values has been orderly to-date, with CoreLogic’s national index falling only 1.6% since the recent high in April and housing turnover has recovered quickly after it’s sharp fall in late March and April.” “Record low interest rates, government support and loan repayment holidays for distressed borrowers have helped to insulate the housing market from a more significant downturn. Advertised supply levels have remained tight, with the total number of properties for sale falling a further 4.3% in the 4 weeks to July 27th , sitting 15.2% below where they were this time last year. Additionally, increased demand driven by housing specific incentives from both federal and state governments, especially for first home buyers, have become more substantial.”
The concern is now what will happen after the fiscal support ends in October and repayment holidays expire in March.
Tim Lawless, goes on to say that the outlook is likely to be further downturn, “Urgent sales are likely to become more common as we approach these milestones, which will test the market’s resilience. Similarly, the recent concerns of a second wave of the virus and the potential for renewed border closures and stricter social distancing polices are likely to further push consumer sentiment down. This is likely to weigh on both home buying and selling activity more broadly.”
Rental market nationally has continued to trend lower with a couple of exceptions.
Rental returns have dropped nationally by 0.3% since March in capital cities. The poorest performances capital are Hobart, Sydney and Melbourne.
Perth and Adelaide are showing the strongest rental conditions amongst the capital cities. These markets have also generally seen lower levels of investor participation, and less ‘investment grade’ construction over recent years, which has kept rental supply reasonably tight.