Australian housing values have tumbled by 1.3 per cent in the past two months, according to the latest CoreLogic data, as prices drop for a second consecutive month.
A 0.7 per cent decline in June followed a 0.4 per cent decrease in May, which was the first fall recorded since mid-2019.
When looking at the combined capital cities alone, real estate prices dropped by 0.8 per cent in June. The only capital cities which did not see housing values decline were Hobart, Darwin and Canberra.
Melbourne led the price drops, with median real estate values tumbling by 1.1 per cent to $683,529 in June.
In Sydney, the median property value decreased by 0.8 per cent to $875,749.
Nationally, price changes were still positive in the past 12 months, jumping by 7.8 per cent, as all capital cities bar Perth and Darwin still saw capital growth. Annual price growth was led by Sydney and Melbourne, where housing values surged by 13.3 per cent and 10.2 per cent respectively.
|June 2020 (% change in value)||Apr – June 2020 (% change in value)||June 2019 – June 2020 (% change in value)||Median value|
Despite the fall in housing prices over the month, estimated transaction activity shot up in June by nearly 30 per cent, following a 21.5 per cent bounce in May.
Market activity went through the floor in April, plummeting by 33 per cent. This coincided with a national ban by the federal government on on-site auctions and open homes due to the coronavirus in April.
During the ban, auction clearance rates for the combined capital cities hit a record low of about 30 per cent. Since then, auction results have rebounded to some extent, with the average clearance rate at about 60 per cent since mid-May.
CoreLogic head of research Tim Lawless said softening in the residential property market has been “mild” so far.
“A variety of factors have helped to protect home values from more significant declines, including persistently low advertised stock levels and significant government stimulus,” he said.
“Additionally, low interest rates and forbearance policies from lenders have helped to keep urgent sales off the market, providing further insulation to housing values.”
Not the end for decline in property price
But Mr Lawless pointed out that financial support from the government and repayment holidays from lenders will eventually end. The performance of the economy when this happens will determine long-term prospects of the real estate market.
Shane Oliver, chief economist at AMP Capital, was less optimistic, and said it was clear that coronavirus-induced economic downturn and the uncertainty it has caused was taking its toll on home prices.
“Were it not for JobKeeper, the increase in JobSeeker, the bank payment holiday and other support measures protecting heavily indebted households and property investors, prices would be falling more rapidly in response to forced sales,” he said.
Dr Oliver believes housing values are likely to see further declines, with the most likely scenario a national average price fall of 5 per cent to 10 per cent until 2021.
He attributed the predicted falls to rising unemployment and a fall in immigration, which is affecting property demand. A weak rental market is another factor which, according to Dr Oliver, are expected to push up the number of forced sales.
“We expect further falls in prices particularly once support measures start to be phased down (albeit they are likely to be tapered down to avoid a ‘fiscal cliff’ after September).”