2020 will be remembered as the rockiest rollercoaster ride Australia’s property market has ever seen. Whether you were buying, selling – or just thinking about doing either – there were hurdles but also rewards.
As COVID-19 arrived down under and restrictions were imposed on inspections and auctions, the future of real estate was up in the air. However, the industry embraced technology, rode the troughs and is emerging out the other side.
The crash that never was
In March, house prices were predicted to fall off a proverbial cliff, but prices have grown in every Australian region since then – all except in Greater Melbourne which was impacted by a drawn out lockdown.i The resilience shown by the property sector through 2020, can be somewhat attributed to unemployment mainly hitting the young, banks working to support customers, unprecedented government stimulus and historically low interest rates.
By October’s end, property data firm CoreLogic was upbeat about the Australian market. Following five months of consistent declines, CoreLogic’s Hedonic Home Value Index had shifted back into positive month-on-month growth posting a very slight 0.4 per cent increase to bring the national median to $559,254. The lift was widespread, except again for Melbourne where there has been a 0.2 per cent decline.ii
A bumpy ride for rental rates
While dwelling values are returning to form, inner city asking rents have been hardest hit in the wake of the pandemic as landlords and tenants face an uncertain future. CoreLogic recorded a substantial divergence between house rents and unit rents, particularly in Melbourne and Sydney. Both cities are experiencing an oversupply of apartments and rental demand has been weakened by the evaporation of overseas migrants and students, coupled with poor labour market conditions.
City snapshots from 2020
Unsurprisingly the Victorian capital is still recovering from a second lockdown phase, but it appears those restrictions only created pent up demand in some Melbourne suburbs. According to CoreLogic’s November Index, once inspections and auctions were allowed, property listings surged, clearance rates lifted and buyer activity recovered.iii
Melbourne posted its first monthly increase in November of 0.7% to $672,172. Overall, asking rents in Melbourne were down 1.7 per cent annually to $444 a week (units -5.1 per cent, houses +0.9 per cent).iv
Australia’s biggest city saw a monthly rise in dwelling values of 0.4 per cent to $860,967. The rate of decline across Sydney’s market has been consistently easing since July. The annual change in dwelling values to the end of November was a positive 3.7 per cent.iii
Sydney’s unit values wavered at the outset of COVID, but by the close of November units were only down 0.7 per cent for the month to $728,168, and actually up 1 per cent annually. Overall, asking rents in Sydney were down 1.5 per cent over the 12-month period to $561 a week (units -4 per cent, houses +0.2 per cent).iv
In November, Brisbane’s median dwelling value hit an all-time high, finishing up the month 0.6 per cent higher at $515,267. The new record came in after 7.2 per cent of annual growth.iii Overall asking rents in Brisbane were up 0.7 per cent annually to $441 a week (units -3.1 per cent, houses +1.3 per cent).iv
Canberra also reached a new median dwelling value for the month of November, coming in at $672,866 after a monthly movement of 1.9 per cent, but an annual improvement of 7 per cent.iii Overall asking rents in Canberra were up 1.8 per cent annually to $568 a week (units +1.3 per cent, houses +2 per cent). iv
Perth’s dwelling values were up 1.1 per cent over November to $463,846, but throughout the 12-month period posted 0.8 per cent annual growth. Perth’s tight rental market conditions rose throughout COVID after a long period of weakness.iii Perth saw a 4.8 per cent annual increase to $407 a week (units +2.6 per cent, houses +5.2 per cent).iv
To find out how what happened in 2020 will shape your 2021 property journey, please don’t hesitate to give us a call.