Knowledge Hub

Article by: Ingrid Fuary-Wagner, Reporter

Source: Australian Financial Review

November 2, 2020

The property market has turned a corner since the advent of COVID-19 with prices increasing nationally for the first time in five months, by 0.4 per cent in October, with Melbourne the only capital city to record a fall in values.

The smaller cities led the charge with strong price growth of 1.2 per cent in Darwin and Adelaide, 1 per cent in Hobart and Canberra, 0.6 per cent in Perth and 0.5 per cent in Brisbane, according to CoreLogic’s latest home value index.

Sydney’s property values, which have been falling consistently since April, recorded a slight increase of 0.1 per cent over the month while Melbourne prices continue to drag the rest of the property market with a 0.2 per cent fall over October.

“The smaller cities have been much more resilient for starters and they are also on a stronger recovery trajectory,” CoreLogic’s head of research, Tim Lawless, said.

“I think partly we can attribute that to the fact they generally have had better management of the virus itself, so we haven’t seen further lockdowns. But also they have better affordability and seem to be quite attractive to first-home buyers so there are some outside factors beyond the virus being better contained.”

Mr Lawless said while a so-called fiscal cliff was real, and there would be forced sellers in the property market, it was still early days.

“The fiscal cliff is eventuating, it is real, but it doesn’t seem to be having any visible impact on housing conditions at least just yet, but keeping in mind it is still fresh,” Mr Lawless said.

“We are only just seeing the wind-down of JobKeeper now, and even though mortgage deferrals are starting to expire, we won’t start to see mortgagee-in-possessions rising probably until after the first quarter of next year,”

“We aren’t expecting foreclosures to become a significant part of the market, because it does look like the vast majority of expired deferrals are moving back into some kind of repayment schedules but there are still some headwinds ahead for the housing market, in the sense that we should expect some weakness around labour markets as JobKeeper winds back and we will see a rise in distressed listings come onto the market.”