With COVID-19 still at large, the property market is showing signs of weakness but there certainly has not been the bloodbath that many predicted. CoreLogic has reported a 0.4% decline in Australian housing values at the end of August. The table from CoreLogic below shows that Melbourne recorded the largest fall at 1.2%, followed by Sydney with a decline of 0.5%.
Tim Lawless, CoreLogic’s Head of Research, believes the decline can be attributed, at least in part, to stalled overseas migration. Melbourne welcomed a large number of immigrants per year pre-COVID. The abrupt halt to immigration has resulted in a cumulative decline of 4.6% to Melbourne’s house values since the pandemic started.
“The performance of housing markets are intrinsically linked with the extent of social distancing policies and border closures which also have a direct effect on labour market conditions and sentiment. It’s not surprising to see Melbourne as the weakest housing market considering the extent of the virus outbreak, and subsequent restrictions, which have weakened the economic performance of Victoria. Looking forward we are likely to see a diverse outcome for housing markets around Australia, depending on how well the virus is contained and the region’s exposure to other factors such as its reliance on overseas migration as a source of housing demand.” Mr Lawless explained.
On a positive note, the rate of decline in home values in Sydney and Brisbane has eased over the past two months. Five out of eight capital cities have also enjoyed steady or slightly rising housing values over the month of August.
The report also highlights how regional housing markets are doing better than their capital city counterparts. They have not been hurt by the decline in demand because of lack of migration. This is also due in part to the normalisation of remote work which makes it possible for workers to live away from the city. Regional markets are attractive for their relatively lower density and lower price.
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