With the exception of Sydney & Melbourne, Australia’s capital city housing values increased in September and the regions performed solidly, in alignment with a striking lift in consumer confidence and the number of listings for sale.
However, the impact of falling values in Sydney and Melbourne (representing 40% of Aussie housing stock by number) dragged the national average down 0.1% – comprising a 0.2% drop in the capitals but a 0.4% rise across the regions.
The main drag on the statistics was of course Melbourne, where Stage 4 restrictions severely curbed real estate activity and led to a fall of 0.9% for September. Since the peak in March, Melbourne values have now come off by 5.5%. Of course, with restrictions now gradually unwinding, we expect to see a change in that trend become evident in the next two months.
Sydney, on the other hand, has been consistently easing since July – shedding 0.3% for the month – but once again, the largest falls were in the upper quartile, not in the more affordable price ranges where most of us compete. There, prices were down just 0.4%.
Regional markets continue to outperform
Relative to the capital cities, the regions keep putting in a solid performance, in a reflection of demand transitioning away from the cities as a result of COVID-19.
Combining results across all regions, the index has slipped just 0.8% since March, while the capitals have fallen 2.6% in the same period. In September, the ‘rest of state’ region, apart from in Western Australia, recorded a lift in housing values.
First National’s regional agencies continue to experience high levels of enquiry, especially coming out of metropolitan Melbourne. As soon as restrictions make it possible, an outpouring of demand from Melbourne is anticipated.
Government financial assistance begins its wind back
Headwinds are approaching as governments begin winding back levels of financial assistance and mortgage deferrals come to an end, against a backdrop of weak labour markets.
However, a number of factors influence are supporting improved housing market conditions. CoreLogic’s head of research, Tim Lawless, says ‘The aggregate effect of low mortgage rates, and the prospect that rates could fall further, low inventory levels, government incentives and improving consumer sentiment seems to be outweighing the negative economic shock brought about by the pandemic.’
Let’s not forget, first home buyers are back in numbers given the considerable government assistance on hand with house and land packages. In Victoria, for example, some buyers stand to gain around $50,000 of assistance, and sizable grants remain on offer from most government jurisdictions.