Melbourne house prices have fallen $40,000 since May as Australia marks its fourth month of consecutive declines

Melbourne resembles a ghostown during its stage four lockdown. (Chris Putnam, Barcroft Media via Getty Images)
  • Melbourne property prices fell by 1.2% in August on the back of the city’s stage four lockdowns, according to research house CoreLogic.
  • It was enough to drag national prices 0.4% south, despite values in most markets remaining firm.
  • As the pandemic continues, future price movement will be hitched to how state governments respond to outbreaks and the way in which the federal government and banks taper their support measures.
  • Visit Business Insider Australia’s homepage for more stories.

As Australia strives to suppress the coronavirus, the impact of its various lockdown measures is becoming apparent.

National property prices marked their fourth consecutive month of declines in August, according to the latest CoreLogic data, dropping another 0.4% Australia-wide.

However, it’s become clear that some markets are dragging the average decline down with Melbourne, currently living under stage four restrictions, falling the furthest.

“Following a similar decline in July, Melbourne home values fell by 1.2% in August, the largest fall recorded amongst the capital cities, demonstrating the impact of a worse viral outbreak relative to other cities, along with a larger demand side impact from stalled overseas migration,” CoreLogic head of research Tim Lawless said.

“Through the COVID period to date, Melbourne home values have fallen by 4.6%.”

The fall represents a $30,000 fall in the median Melbourne property price since May. Houses meanwhile fell 5.1%, or around $40,000, over the same period, with just half of Melbourne properties selling at auction.

Other capitals have been less affected as a variety of lockdown measures and outbreaks see the different markets diverge.

In Sydney, prices contracted 0.5% over the month and 2.5% over the past four months. Brisbane meanwhile fell just 0.1% in August, making it the only other capital city to fall.

Adelaide and Perth prices didn’t budge one bit either way in August, Hobart grew just 0.1%, while Canberra and Darwin prices rose by 0.5% and 1% respectively.

Capital cities have been held up, Lawless acknowledges, by limited stock on the market that has been met by sufficient demand. However, with spring typically bringing buyers and sellers out in a flurry, that could soon change.

Meanwhile, government support measures have helped prop up the market more generally, with distressed sales remaining low.

“This could potentially change however as fiscal support starts to taper at the end of September and distressed borrowers taking a repayment holiday reach their six-month check-in period around the same time,” Lawless said.

“The timing of these two events could be the catalyst for a gradual rise in distressed listings which will be an important trend to monitor.”

Looking ahead, Lawless expects to see the performance of different markets to splinter further, with each determined by how they transition out of lockdown.

Outside the cities, regional NT and Western Australia fell by 2.3% and 1.4% apiece while most other states held firm.

“Unlike their capital city counterparts, which usually receive 85% of net overseas migration, most regional markets have avoided the drop in demand caused by the pause in migration,” Lawless said.

“Regional markets may also be appealing for their relatively low density and lower price points. The normalisation of remote work through the pandemic could make proximity to major cities less of a factor in home purchasing decisions.”

While such a move could help ease affordability issues in cities like Sydney, whether or not it marks the start of a long-term population shift may yet depend on the pandemic.

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