Lockdowns haven’t been able to slow down Australia’s property market yet, but Sydney’s could prove the exception

(Peter Rae, SMH)
  • Australia’s property markets have proved resilient throughout its various lockdowns.
  • CoreLogic found that sales tended to bounce back following a lockdown period, but says government intervention had been the biggest factor stabilising the market.
  • As Sydney looks like extending its three-week lockdown further, a lack of government support this time around could prove the biggest test of the market yet.
  • Visit Business Insider Australia’s homepage for more stories.

As Australia looks down the barrel of more lockdowns scuttling home auctions and inspections, a new analysis hints at what prospective buyers can expect.

On Friday, property research house CoreLogic revealed how strict stay-at-home orders have really impacted the country’s largest markets.

Examining the last 16 months of data, head of Australian research Eliza Owen said the disruption to sales had actually been relatively limited, tending to postpone sales rather than scratch them entirely.

“It is true that demand takes a hit during lockdowns. There was a lot of uncertainty amid stage two restrictions nationally last year, and sentiment for housing market outcomes plummeted,” she said. “But supply also declined, because sellers and agents knew it may not be the best time to market property. That helped to balance out the overall effect on prices.”

Owen found that lockdowns led to a greater number of auctions being withdrawn or postponed, but that properties were also increasingly selling prior to auction as well.

Broadly the trend meant transactions slowed but tended to quickly recover when live auctions were again permitted and conditions normalised.

CoreLogic data shows prices nationally fell just 2.1% peak to trough during 2020, although Melbourne, which was locked down four times, had the most anaemic growth of all capital cities. Across the country, prices have jumped more than 12% during the first six months of 2021.

While constrained supply helped to put a floor under prices, it was a record level of government interference in the market that really kept the heat in the market, according to Owen.

“A big part of why the housing market didn’t see further value declines was the enormous income support packages provided to households, the role of JobKeeper in maintaining employment relationships, low mortgage rates and mortgage repayment deferrals,” she said.

“In the event of another extended lockdown, the future of housing demand and supply becomes much less certain if that same government and institutional support is not there.”

Such a scenario could already be unfolding. On Friday, New South Wales Premier Gladys Berejiklian warned Sydney’s three-week lockdown could be extended again, as cases continue to climb.

Mortgage deferrals are no longer available, JobKeeper ended in April, JobSeeker has been cut, and monetary stimulus is beginning to unwind.

At the same time, regulators are considering cracking down on riskier lending in the coming months, diminishing demand in the market.

While Australia’s real estate has proven resilient so far, it is unclear just how much it can withstand.