Update 0ct 2020
The latest house price data from CoreLogic show what I have been seeing in the market; property prices dipped slightly and now six of the eight major capital cities are increasing in value from last month.
Remember there are many property markets within each capital city and performances do vary. However, seeing what is happening overall (medium house prices), is useful as it speaks to the stability and trend of the market.
In September, dwelling values rose in Darwin, Adelaide, Brisbane, Hobart, Canberra and Perth. While house prices grew in value in all of the non-metro areas.
According to CoreLogic, the extent of the price falls across the country have amounted to just 2.8%, with the bulk of the downturn coming from Melbourne on the back of the second period of lockdown.
The fact that house prices have turned the corner in most areas is highlighted by the chart below where we can see that a number of cities are actually seeing house prices higher than where they were before COVID began.
Source: Core Logic
It’s also not just the metro markets that are seeing strong gains. We are seeing strong numbers in highly desirable regional areas such as Noosa at the moment.
With interest rates at record low levels and the Federal Government also looking at easing credit further by cutting back responsible lending laws - which will make it easier for investors to access credit - the stage is set for a for a strong period of growth in the years ahead.
That’s highlighted by some recent predictions from Westpac Economics who believe we could be in for some very strong growth. As credit continues to become more freely available, Westpac thinks Brisbane house prices will increase by 20% over the next two years, while Sydney prices could increase by 14% and Melbourne prices could rise by 12%.
Source: Westpac
One of the other key reasons behind the strong house price performance throughout COVID has been that listings have remained low. Across the country are down by around 20% on where they were last year and this has helped to prop up any weakness.
Now that most of the country is back on its feet, this tight supply and strong demand, fueled by ultra-low interest rates are making good properties hard to come by and in turn lifting prices.
Clearly, the fears that house prices were going to crash is now unfounded. There were initially concerns that when JobSeeker and JobKeeper ended and mortgage holidays we over that we could run into a cliff of sorts. However, those programs are being tapered off and demand has really not seen any reduction just yet.
With the RBA committing to keep rates low until the jobless rate falls back under 5%, we could well be in for a prolonged period of near-zero interest rates and there is a good chance we will continue to see money flow into high-quality assets such as Australian residential property.
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