- National property prices fell in Australia on a technicality in September, distorted by big declines in Melbourne and Sydney.
- Melbourne values plummeted 0.9% over the month, marking a 5.5% fall since March, and Sydney recorded another 0.3% fall.
- Meanwhile, all other capital cities are bouncing, along with the regions.
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Australia’s largest two property markets are distorting the national property index, as prices begin to bounce.
While nationally, prices fell 0.1% throughout the month of September, nearly every single market got more expensive.
With Sydney and Melbourne home to around 40% of the nation’s housing, large declines there are enough to dwarf growth elsewhere.
“By far the weakest result across the capital cities, Melbourne housing values were down 0.9% in September,” CoreLogic head of research Tim Lawless said, noting values are down 5.5% since March.
That’s more than twice other capital cities, falling an average of 2.6% since the start of the pandemic in Australia. Sydney prices meanwhile fell another 0.3% over the month to be the only other city in decline.
However, as Melbourne and Victoria make a belated exit from a lengthy lockdown, Lawless is optimistic the market might turn again as confidence and the economy rebounds.
“Since peaking in March, Melbourne values are down 5.5%. With restrictions starting to lift and private home inspections once again permitted, we expect to see activity lift in October,” he said.
Sydney, meanwhile, is easing at a quicker rate as the overall market improves, Lawless said. For those living outside of Australia’s two gargantuan capital cities for example, property is only getting more expensive despite a recession.
Adelaide prices jumped 0.8% and Darwin twice that in August. Brisbane moved 0.5% higher with Hobart, Canberra and the regions not far behind.
“From a cyclical perspective, regional areas weren’t recording the same growth conditions pre-COVID, so home values in these markets are often more affordable, and don’t have a high base to fall from,” Lawless said.
“Anecdotally we are also observing a transition of demand away from the cities towards the major regional centres, particularly those that are adjacent to the larger capitals where residents can commute back to the cities if required.”
However, in the face of that growth – and for the general optimism headed into spring – there are still a range of unresolved issues. For one, mortgage deferrals have helped delay distressed sales until January.
As JobSeeker and JobKeeper are slashed in the second half of this year and the first quarter of 2021, there may be some tough questions to be asked of homeowners as support falls away.
Until now, a low volume of listings have helped keep put a floor under soft prices, Lawless acknowledges.
“The imbalance between available supply and housing demand is one of the reasons why housing values have hardly fallen through the COVID period so far, and helps to explain the recent upwards trend in values across some cities,” he said.
“This trend will be important to monitor over coming months as fiscal support tapers and the financial situation of borrowers taking a repayment holiday is assessed by their lender. A rise in urgent or distressed listings would provide a further test for the resilience of housing values.”
For now, it looks like it is the most expensive end of town that’s getting a breather.