While the rug hasn’t been pulled out from underneath the property market just yet, prices continue their gradual descent, with the CoreLogic home value index recording a decrease of 0.4% in August.
This marks the fourth consecutive month property prices have fallen, however the rate of decline has slowed compared to previous months.
CoreLogic head of research, Tim Lawless said Melbourne continues to lead the decline, with home values falling by 1.2% in August and 4.6% since the onset of the pandemic.
“It’s not surprising to see Melbourne as the weakest housing market considering the extent of the virus outbreak, and subsequent restrictions, which have weakened the economic performance of Victoria,” he said.
Among capital cities, only Darwin (+1%), Canberra (+0.5) and Hobart (+0.1) recorded increases in dwelling values. Elsewhere, property prices held steady or decreased only slightly, as in Sydney and Brisbane, where prices fell by 0.5% and 0.1%, respectively.
Lawless expects diverging outcomes across markets as states experience varying degrees of success in containing the virus. Reliance on overseas migration as a source of housing demand will also result in uneven impacts.
“The performance of housing markets are intrinsically linked with the extent of social distancing policies and border closures which also have a direct effect on labour market conditions and sentiment,” Lawless said.
Regional markets withstand shocks so far
While cracks have begun to show across many capital cities, many regional markets have proven to be much more resilient.
In regional Victoria, dwelling values have fallen by 1.4% in the past three months, compared to 3.5% in Melbourne. Over the same period, the regional NSW, South Australia and Tasmania markets saw increases of between 0.7% and 1.2%.
“Unlike their capital city counterparts, which usually receive 85% of net overseas migration, most regional markets have avoided the drop in demand caused by the pause in migration,” said Lawless.
“Regional markets may also be appealing for their relatively low density and lower price points. The normalisation of remote work through the pandemic could make proximity to major cities less of a factor in home purchasing decisions.”
If you’re on sound financial footing and you’re hoping to take advantage of dipping prices, browse our guide to buying during lockdown for tips. And if you’d like to compare loans, visit our home loan comparison page for more information.
Home loan comparisons on Mozo - last updated January 16, 2021
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