After four months of incremental declines in home values due to the COVID-19 pandemic in Australia, August CoreLogic data confirms where the trends lie, how different price ranges are responding, and what the outlook is for the remainder of 2020.
It’s abundantly clear that home sales and advertised stock levels continue to follow consumer sentiment, so how the property market finishes 2020 depends on the success of Victoria’s restrictions in reducing COVID-19’s community spread.
In alignment with reported daily numbers, consumer sentiment fell through late March and April, posted a partial recovery through May, June and July, before falling again in August – as a direct impact of Victoria’s second lockdown.
The number of homes for sale versus the number selling has essentially followed the same trajectory. New listings halved between mid-March and the first week of May, before rebounding 48% over the next three months. However, predictably, the recent trend has seen new-to-market listings fall 11.5% across August.
Based on Victoria’s current COVID path, seemingly well-contained trends in other states, and a tangible surge in demand from capital city buyers wishing to relocate, First National anticipates a lift in homes for sale throughout spring as well as an acceleration in the speed at which homes sell.
Conditions improve for all capitals but Melbourne
With the exception of Melbourne, all the capital cities experienced a reduction in their rates of decline in August. Some price ranges even continued to see gains, as we’ve reported in recent months.
Combining the results across the capitals, affordable (lower quartile) homes increased in value by 0.1% nationally. Separating out Melbourne, where affordable homes fell by 0.6%, it’s clear that various government incentives are motivating first home buyers and underpinning values in this range.
Monthly change in capital city home values
Regional markets remain star performers
Regional markets have been the star performers of 2020, outshining their city cousins across the largest states. Virtually all First National members report a surge in demand from both homeowners and tenants, looking to escape the cities. Their lower density and price points continue to be their major appeal, and many have not been affected by the fall in overseas migration. If you are considering a Sea Change or Tree Change, ask us for a copy of our new guidebook.
Auction clearance rates at decade averages
Throughout August, the combined capital city clearance rate held roughly in line with the decade average – 59%. Sydney and Melbourne have of course diverged, with Melbourne clearance rates sharply lower than Sydney’s, and Sydney’s volume of auctions is steadily climbing as we move into spring.
In summary, housing markets are showing greater diversity relative to earlier in the COVID-19 pandemic, but continuing to show alignment with confidence related to restrictions, border closures and stimulus measures.