Australian housing values have suffered a third consecutive month of declines.
CoreLogic’s home value index dropped 0.6 per cent over July, an ever-so-slight improvement from June’s 0.7 per cent drop, but a drop all the same.
CoreLogic’s head of research, Tim Lawless, explains: “The impact from COVID-19 on housing values has been orderly to-date, with CoreLogic’s national index falling only 1.6 per cent since the recent high in April and housing turnover has recovered quickly after its sharp fall in late March and April.”
Not surprisingly, within the capital cities, Melbourne led the decline, with values falling 1.2 per cent. Sydney values fell 0.9 per cent, while only Canberra (+0.6 per cent) and Adelaide (+0.1 per cent) enjoyed rises in property values.
Regional markets are more resilient, with only regional Victoria and regional Western Australia recording falls, at 0.5 per cent and 3.2 per cent respectively.
These figures don’t tell the whole story, however. As Mr Lawless points out, various stimulus packages, record low interest rates, and loan repayment holidays have “helped to insulate the housing market from a more significant downturn”.
As these measures end, the market is likely to be shaken up again.
“Urgent sales are likely to become more common as we approach these milestones, which will test the market’s resilience.
“Similarly, the recent concerns of a second wave of the virus and the potential for renewed border closures and stricter social distancing polices are likely to further push consumer sentiment down. This is likely to weigh on both home buying and selling activity more broadly,” Mr Lawless said.
“As stimulus measures wind down and borrowers taking a repayment holiday face up to their debt, it’s logical to expect a rise in distressed properties coming onto the market.
“The extent to which this causes additional downwards pressure on home prices depends on how the Australian economy is travelling at that time.
“Further virus outbreaks present a clear and present danger to the depth and length of the recession, and the performance of the housing market.”