New figures have revealed that despite challenges earlier in the year, the Australian housing market built momentum through the end of 2020, with regional housing values leading the charge.
CoreLogic’s latest Hedonic Home Value Index, released this week, reported an overall increase in Australian home values of 3.0 per cent in 2020.
Regional housing values rose 6.9 per cent, a rate of capital gain more than three times higher than the combined capital cities, where home values were up 2.0 per cent over the year.
CoreLogic research director Tim Lawless said that on the whole, 2020 was characterised by a mild COVID-19 inflicted dip in values, but unprecedented volatility in the transaction space.
“The number of residential property sales plummeted by 40.0 per cent through March and April, but finished the year with almost 8.0 per cent more sales relative to a year ago, as buyer numbers surged through the second half of the year,” he said.
“Despite the volatility, housing values showed remarkable resilience, falling by only 2.1 per cent before rebounding with strength throughout the final quarter of 2020.”
Remote working opportunities a driver of regional growth
While the COVID-19 pandemic saw the housing market take a hit in the first half of the year, it appears to have also had an impact on regional dwelling values.
Remote working opportunities became more prevalent as a result of the pandemic and, in response, demand for lifestyle properties and lower-density housing options became more popular, with regional areas of Australia seeing housing market conditions surge.
“Regional housing markets had generally underperformed relative to the capital city regions over the past decade, but 2020 saw regional housing values surge as demand outweighed supply,” Mr Lawless said.
Low interest rates a clear contributor to rebound in activity
The CoreLogic index noted that, in retrospect, the rebound in housing market activity and dwelling values is unsurprising, given the rapid and substantial monetary and fiscal response from the federal government and policy makers – including cutting the Reserve Bank of Australia cash rate three times throughout the year to an unprecedented 0.10 per cent.
“Record-low interest rates played a key role in supporting housing market activity, along with a spectacular rise in consumer confidence as COVID-related restrictions were lifted and forecasts for economic conditions turned out to be overly pessimistic,” Mr Lawless said.
“Containing the spread of the virus has been critical to Australia’s economic and housing market resilience.”
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