Housing market data has shown a fairly strong post-COVID recovery trend following a short, sharp slowdown in activity through the middle of 2020 according to Eliza Owen, Head of Research Australia for CoreLogic.
“Australian housing values rose 2.3% in the final quarter of the year, trending higher from a recent low in September 2020, to be just 0.1% below the previous record high value in October 2017,” said Owen.
Data from CoreLogic reveals which housing markets have seen the highest value increases relative to their value in March 2020. Eliza Owen said “March 2020 is a good yardstick for measuring the impact of COVID on housing markets. That is because it encompasses the ‘start’ of COVID in Australia when the country reached the milestone of 100 cases diagnosed, and subsequently, stage 2 restrictions rolled out nationally”.
Core Logic’s research shows at the capital city level, Melbourne, Sydney, Perth, Brisbane, and Hobart saw some level of value falls close to the onset of COVID. By December however, Perth, Brisbane, and Hobart housing values had surpassed their March 2020 highs. Home values across Darwin, the ACT, and Adelaide have continually increased since March, with Darwin values up 8.3% since the onset of the pandemic.
Some of the strongest value increases since March are located in areas that did see a COVID-induced decline including Kwinana in Perth (up 8.7%), Burnside in Adelaide (up 7.0%), and Scenic Rim in Brisbane (up 6.5%). Most of the markets with a strong recovery had seen relatively mild downturns, to begin with.
A good example of this is Sydney’s Central Coast, where values declined just -0.1% over April. The Central Coast has been a resilient and popular market through much of 2020 due to the relatively affordable and low-density stock across the region, as well as the coastal appeal. Since March, dwelling values on the central coast have increased 6.5% through to December.
Of the 10 council regions where values have been most impacted since the onset of the pandemic, eight were located across Melbourne, and two were in Sydney. It is unsurprising to see Melbourne dwelling markets have a long way to go before recovering value. Housing demand in this historic global city has been hampered by extended international border restrictions, as well as domestic social distancing policies through the September quarter.
Highlighting the depth of decline, or value increases, at an LGA level has important implications for real estate, banking, and finance. The data shows inner-Melbourne council areas may be at greater risk of negative equity for recently purchased homes. For first home buyers or first-time investors, the data also demonstrates where values are relatively discounted due to COVID-19. However, it is worth noting that in 2021, more markets are likely to move into recovery mode. This is expected as long as economic conditions continue to recover, and mortgage rates remain at record lows.