Over the June quarter, which saw the bulk of lockdowns, home values nationally fell by just 0.8%.2 But annual gains remained strong at 7.8%.
So, why have home values held their ground amid so much uncertainty?
Property market proves resilient
One reason was the ability of the real estate industry to quickly adapt to lockdown measures, and introduce innovations like digital home inspections and virtual auctions. This helped to keep sales ticking over during an unprecedented period. CoreLogic head of research, Tim Lawless, says a variety of other factors have helped to protect home values from more significant declines, including “persistently low advertised stock levels and significant government stimulus.”
He notes too that low interest rates and the option to take a home loan repayment holiday for up to six months (which a number of lenders have recently extended) have provided “further insulation to housing values”.
The top 25% bears the brunt
Even where prices have cooled, the greatest impact has typically been felt across the prestige end of the property market. In Sydney, for instance, the top 25% of the market was down 1.3% over the June quarter, while the most affordable quarter of the market rose 0.2% in value over the same period.
One reason for this is that some home owners opted to sit tight during COVID-19 rather than list their home for sale. This has kept a lid on the supply of available properties. As a guide, the current listing ratio is tracking around 1.3, meaning for every new listing added to the market there are 1.3 home sales.3
“A remarkable recovery”
We are clearly not out of the COVID-19 woods yet. However, the Australian property market has once again demonstrated its resilience. As CoreLogic puts it, home values are not crashing, and “transactional activity has shown a remarkable recovery after plummeting in April.”
Here to help
The bottom line is that if you’re planning to buy – or sell – it could pay to start working towards your property goals today. So no matter where you are in your property ownership journey, give your local Mortgage Choice broker a call today to see how we could make it work for you.