Michael Janda* says the real estate market is likely to shrug off short COVID-19 lockdowns as house prices keep surging.
Australia’s house price surge has continued into winter, but there are early signs momentum might be coming out of the market, and not due to snap COVID lockdowns.
CoreLogic’s monthly home price index rose 1.9 per cent in June, led by 3 per cent growth in Hobart and 2.6 per cent in Sydney.
The index rose 13.5 per cent over the past financial year just ended, with Darwin (+21pc), Hobart (+19.6pc), Canberra (+18.1pc) and regional markets (+17.7pc) leading the way.
That is the strongest annual rate of growth recorded by CoreLogic nationally since April 2004.
Houses were more popular with buyers, rising 15.6 per cent over the financial year versus a 6.8 per cent lift in unit prices.
CoreLogic estimated that more than 580,000 properties changed hands last financial year, also the highest number since early 2004, with Sydney (110,000), Melbourne (89,000) and regional Queensland (81,000) the busiest markets.
Over the 2021 calendar year, Sydney has been the fastest-growing major market, with growth of 8.2 per cent in the last quarter alone.
Low rates fuel strong demand, but there are few sellers
CoreLogic’s head of Australian research Eliza Owen said a combination of strong demand, fuelled by a recovering economy and ultra-low interest rates, with low levels of stock coming onto market for sale, resulted in the extreme price rises.
For example, CoreLogic estimated there were around 126,000 new listings in the three months to June, but more than 167,000 properties sold, meaning stock on the market fell again.
“The latest listings count from CoreLogic indicates that in the 28 days to June 27, total advertised stock remained 24.4 per cent below the five-year average,” she said.
“This dynamic of strong consumer demand, and low housing supply, continues to create some urgency among buyers.”
However, while the market remains strong, Ms Owen said the June quarter had seen a slowing rate of property price growth for the most expensive quarter of the capital city markets.
“This easing in the pace of growth at the top end of the market is another clear sign of a shift in momentum,” she said.
“The rest of the market tends to follow movements at the high end, and this is the first time in nine months that the high-tier growth rate has not accelerated.”
Ms Owen also told the ABC that a number of high-profile property investors had decided now was a good time to sell.
“We’ve seen the sales of some very top-end, high-profile sellers,” she observed.
“So, if very high-profile sellers are calling the peak of the market and thinking it’s a good time to sell, I think that’s pretty telling as well.”
Lockdowns should not sink property prices: CoreLogic
As for whether the latest short lockdowns will derail the level of price growth, Ms Owen is doubtful.
“Throughout lockdowns in the past 15 months, basically what CoreLogic data has shown is that you get a drop off in demand, you get a drop off in sales, but you also get a drop off in supply, because people know it’s not an ideal time to sell,” she observed.
“So generally we see lower volumes, and because of that drop in demand and supply, the net effect on prices really isn’t much at all, especially when it comes to circuit breaker lockdowns.”
However, she said that if lockdowns dragged on in major markets, then the attitude of banks to mortgage repayment deferrals would be critical to the property market, as it was last year.
So far, most major banks have told customers that they will consider repayment relief for those adversely affected by lockdowns.
*Michael Janda is the ABC’s Online Business Reporter.
This article first appeared at abc.net.au.