Housing values are continuing to decline in Australia, particularly in Sydney, Melbourne and Perth.
CoreLogic's Home Value Index for Australia declined 0.6% in July, which was the third straight month of declines.
It is now 1.6% lower than it was in April.
Unsurprisingly, the biggest decline was in Melbourne, where it was down 1.2% in July and down 3.2% for the three months to the end of July.
In Sydney it was -0.9% for the month and -2.1% for the three months ended July.
Perth was down 0.6% for the month and -2.2% for the three months ended July, while Brisbane was -0.4% for the month and -0.9% for the three months.
The top end of the market was the most badly affected.
"Higher value markets tend to be more reactive to changes in the economic environment, having led both the upswing and the downturn over previous cycles," CoreLogic Head of Research Tim Lawless said.
"The COVID related downturn has seen this trend playing out again, with upper quartile values down 2.9% across the [state] Capital Cities Index since the end of March, while lower quartile values have fallen by only 0.5%," he said.
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27 Comments
Could Auckland become more expensive than Sydney? DFA Post from just over a year ago
Because sales have collapsed under Covid, NSW are to end stamp duty and replace it with a land tax on your primary residence. Pretty sure that's grandfathered so you will only pay it should you buy once stamp duty is abolished. Looking at the Covid situation there, every state has it's own police dept, health office, legislature etc etc. The sheer level of duplication is extraordinary
Australia has a complex and inefficient tax system. Land taxing holiday homes just means people don't bother owning them and go on overseas holidays instead. They miss out on the construction business and all the ancillary services and demand just because they want to land tax. It's the reason coastal NSW is so sleepy and trapped in the 60's, it feels tired compared to Queenstown, Coro, BoI etc.
Some factors I think might be relevant:
1. Covid has put a dampener on open homes and auctions, so less opportunity for agents to deploy their boiler room sales tactics.
2. Unemployment figures, and anxiety on future job security are making ordinary people hold off on largest purchase of their lives.
3. Collapse of tourist numbers and international student numbers means that rental market is being flooded with properties. Tenants (many of whom have their own cashflow woes) are demanding lower rents. Landlords/agents are either forced to acquiesce, or sell.
4. Foreign investors are no more. Even if they have found workarounds through trusts, surely the volume of activity is still much lower than before. And furthermore, they would be more focused on what's going on at home, and protecting their own principal places of residence. Funds moving out of countries will be scrutinised like no other time in recent history by governments in record deficits.
5. All of the above *should* be making potential purchaser to think very hard on whether the current asking prices are in line with realistic net rental income (or savings on rent, for FHB's)
How many of these factors does Auckland/NZ share with Australia? 4 of 5. But I don't know. I'm told that we're diffrunt.
(I'm sure I've missed other factors)
Adelaide, Canberra and Hobart prices all up over the June quarter on latest Corelogic stats. So house hunter is correct. Interestingly, all of these places are among those that have had no Covid community transmission over the period. All capitals other than Perth and Darwin are up over last 12 months.
The situation in Australia is far worse than reported. Corelogic don’t explain how they arrive at their figures and there is a lot of discussion regarding their accuracy. SQM research apparently has more robust data. For those that have not seen Martin Norths Walk the World Youtube channel he has up to date data on mortgage and rental figures including stress levels and it does not paint a pretty picture. Expecting a bank bail out, big bank losses in general and property prices to fall between 15% and 30%. If this current wave of covid is not bought under control then he expects a bank bail in (goodbye customer deposits) and house prices to drop up to 45. https://youtu.be/QeRadr6c_U8
Sensationalism. Draws attention but not backed up by any data I have seen. Nobody is talking about bank bailouts. Also, deposits up to 250k per person, per bank, are govt guaranteed. Australia’s housing market does not all move in unison, it is multiple markets, not one. Same goes for NZ. I live in one of the areas mentioned above as increasing in value, and I can tell you, houses are selling promptly without discounts. Generalisation is not possible, as there are too many differences in workforces and populations. True effects on both the NZ and Au property markets of Covid (Whatever they are) will be seen in time, likely later this year and into next. This pandemic will end, all do, and with it, recovery.
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