Australia’s housing market is already kicking out of its coronavirus slump with all major markets enjoying growth over the last month, except for Melbourne.
According to CoreLogic’s home value indices, national real estate values enjoyed their first rise in six months during October.
National values rose 0.4 per cent in a strong sign of buyers’ and sellers’ faith in the market, and of the importance of the sector in Australia’s recovery from our COVID-19 enforced recession.
However, there has been a significant distinction between house and unit sales.
“The rise in capital city housing values over the month was entirely attributable to a 0.4 per cent lift in house values which offset the 0.2 per cent fall in unit values,” CoreLogic’s Head of Research, Tim Lawless said.
“Through the COVID period so far, unit values have actually shown a smaller decline in values than houses, but this is likely to change.”
Home values rose in all capital cities, bar Melbourne, for a 0.2 per cent rise overall and the regions enjoyed even stronger growth of 0.9 per cent in October, again highlighting the increased interest in property out of metropolitan areas.
Adelaide and Darwin led the way with an impressive rise of 1.2 per cent each, followed by Canberra and Hobart as both cities prices rose by 1 per cent. Perth’s values rose by 0.6 per cent, in Brisbane by 0.5 per cent and in Sydney by 0.1 per cent. Melbourne’s home values fell 0.2 per cent over the month of October.
Over the quarter Melbourne’s home values have fallen by 2.2 per cent as they endured one of the longest lockdowns in the world. However over the past year, values are still up 0.6 per cent in the Victorian capital.
In our other major market of Sydney, values are down 0.6 per cent for the quarter but up 6.1 per cent year-on-year.
“Almost two thirds of Australian units are rented, and rental conditions have weakened, especially in the key inner city precincts of Melbourne and Sydney, Mr Lawless said.
“These areas have a higher concentration of unit stock, and historic exposure to demand from overseas migration. Low levels of investment activity, relatively high supply of unit stock in inner-cities and international border closures are key factors that imply units will under-perform relative to houses over the medium term.”
Values in all other capital cities are up over the quarter and over the past year.
The regions continue to outperform the major centres, and defy the coronavirus downturn with combined regional values up 1.3 per cent over the quarter, as opposed to a 0.5 per cent fall in the combined capitals.
Over the year, the combined capitals are up 3.7 per cent. But again, growth is up greater outside the cities, with combined regional values up 4.8 per cent.
The past two months have reversed the previous mild falls across the combined regional areas,” Mr Lawless said.
“In the seven months since March, regional dwelling values are up 1.7 per cent while values across the combined capitals index have fallen by 2.3 per cent”
“The new-found popularity of working from home is only one factor helping to support regional home prices. More affordable price points, lower densities and lifestyle factors, are also under-pinning the relative strength across many regional areas of the country.”
Mr Lawless said strong demand and low levels of stock were driving price growth.
FAITH IN THE MELBOURNE MARKET
He was also optimistic about the Melbourne market.
“If you look at the trajectory, it‘s pretty clear Melbourne is stabilising,” Mr Lawless said.
“Not just in our value indices, but also the clearance rates have been very strong, activity is bouncing back, a strong rate of absorption and the listing numbers as well.
“Melbourne showing exactly the same sort of trend that we‘re seeing in other capitals just much more lagged because of the lockdown situation.”