While the number of residential sales plummeted through March and April 2020 ended with more sales than 2019.
That’s the message from CoreLogic’s research director, Tim Lawless who declared unprecedented volatility in the transaction space in 2020 with a number of positive outcomes.
“The number of residential property sales plummeted by 40 per cent through March and April but finished the year with almost 8 per cent more sales relative to a year ago as buyer numbers surged through the second half of the year.
“Despite the volatility, housing values showed remarkable resilience, falling by only 2.1 per cent before rebounding with strength throughout the final quarter of 2020,” said Mr Lawless.
As remote working opportunities became more prevalent and demand for lifestyle properties and lower density housing options grew, regional areas of Australia saw housing market conditions surge over the past 12 months ending the year 6.9 per cent higher than 2019.
“Regional housing markets had generally underperformed relative to the capital city regions over the past decade, but 2020 saw regional housing values surge as demand outweighed supply,” said Mr Lawless
On the flip side, higher density housing has generally underperformed throughout the year, with capital city unit values holding reasonably firm.
Excluding Melbourne, every capital city recorded a higher rate of capital gain for houses relative to units in 2020.
According to Mr Lawless, the stronger growth conditions for houses over units is due to a range of factors.
“Unit markets have historically been more popular amongst investor buyers; demand from investors has been weighed down by weak rental conditions across the unit sector along with high supply levels in some precincts,” said Mr Lawless.
Support for the property market
Mr Lawless says the rebound in housing market activity and dwelling values is unsurprising given the level of intervention by Government and policymakers during the year.
Although housing markets are gathering pace, four of the eight capital cities are still recording dwelling values lower relative to their previous peaks.
Melbourne home values are still 4.1 per cent below their March 2020 peak, and Sydney dwelling values need to recover a further 3.9% before surpassing the previous July 2017 peak.
Perth and Darwin values remain 19.9 per cent and 25.7 per cent below their 2014 peaks.
Greater demand in a low stock environment
Low inventory levels have been a feature of the Australian housing market through 2020.
Although the number of new listings surged higher through spring and early summer, the total number of residential dwellings advertised for sale has remained persistently low throughout 2020.
Total listings peaked at the end of November with approximately 165,000 properties available for sale, 18 per cent down on the same period last year.
At the end of 2020, listings were 21 per cent down the end of 2019.
This has lead to a rapid rate of absorption with more active buyers in the market.
“This imbalance between effective supply and demand is another factor that has supported a rise in housing prices as a sense of urgency returned to the market.
“With home buyers outnumbering sellers, most areas around the country represent a seller’s market.”
Across the combined capital cities, the median number of days on market has reduced from a recent high of 43 days over the three months ending July to 33 days throughout the December quarter.
Similarly, vendors are discounting their asking prices by a smaller amount, with the median vendor discount reducing from 3.6 per cent to 2.8 per cent.