Market decline

Third month in a row: Australian real estate market falls

The Australian real estate market has lost value. Image: Getty

The Australian real estate market fell for the third consecutive month, with median home values ​​falling 0.6% in July.

Sydney and Melbourne were behind the drop, with Sydney dropping 0.9% and Melbourne 1.2%, the capital’s biggest drop.

Perth fell 0.6%, while Brisbane fell 0.4% and Hobart fell 0.2%. Darwin fell 0.3 percent.

Canberra and Adelaide were the only capitals to register increases in value of 0.6% and 0.1% respectively.

Regional houses held up better, with house values ​​unchanged in July.

While the drop in values ​​was widespread, CoreLogic’s head of research, Tim Lawless, noted that it was a reasonably smooth slide.

“The impact of Covid-19 on home values ​​has been ordered to date, with CoreLogic’s national index only falling 1.6% since the recent April high and housing turnover has risen. recovered quickly from its sharp drop in late March and April, ”Lawless said. .

“Record interest rates, government support, and loan repayment holidays for distressed borrowers have helped insulate the housing market from a deeper downturn,” Lawless said.

The total number of homes for sale fell a further 4.3% in the four weeks to July 27, bringing it to 15.2% below last year’s figure around the same time.

“In addition, the increased demand driven by specific housing incentives from federal and state governments, especially for first-time buyers, has become more substantial. “

Approaching cliff

However, while JobSeeker, JobKeeper and mortgage deferrals are expected to decline from the end of September, Lawless predicts that house prices will continue to decline.

“Urgent sales are likely to become more common as we approach these milestones, which will test the resilience of the market,” Lawless said.

Likewise, recent concerns about a second wave of the virus and the potential for further border closures and stricter social distancing policies are likely to further lower consumer confidence. This should weigh on both buying and selling housing in general. “

Expensive homes are expected to lead the fall. Historically, higher value homes fall first and farther during tough economic times, Lawless said, with the Covid-19 downturn being no different.

The most expensive 25% of homes fell 2.9%, while the cheapest neighborhood has fallen 0.5% since the end of March.

Sydney and Melbourne also took the brunt of the drop in value, with Sydney’s most expensive homes falling 2.5% in the last quarter and Melbourne’s most expensive homes plunging 5.2%.

But real estate is performing better than expected

Lawless said Australian real estate weathered the crisis better than expected, with the drop in values ​​being fairly moderate.

However, the real test of the real estate market will come in October.

“As the stimulus packages end and borrowers who take repayment leave face their debt, it makes sense to expect an increase in distressed properties coming onto the market,” he said. declared.

“The extent to which this causes further downward pressure on house prices depends on how the Australian economy is moving at the time. Other virus outbreaks pose a clear and present danger to the depths. and the duration of the recession, and the performance of the housing market. ”

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