The national property price index grew a slight 0.3 per cent in April against a backdrop of significantly reduced market activity and consumer confidence.
Hobart (-0.1 per cent) and Melbourne (-0.3 per cent) were the only capital cities to record a fall in property values, according to the CoreLogic’s monthly house price results.
That’s despite economists and experts flagging huge falls in values of up to 40 per cent.
“Although housing values were generally slightly positive over the month, the trend has clearly weakened since mid-to-late March, when social distancing policies were implemented and consumer sentiment started to plummet,” CoreLogic head of research Tim Lawless said.
The national figure marks the smallest monthly movement since June 2019 when the index slid 0.2 per cent lower. Additionally, the 0.3 per cent growth marks a sharp slowing of growth: March saw prices increase by 0.7 per cent.
Sydney and Adelaide saw prices grow by 0.4 per cent, while Brisbane saw property values grow by 0.3 per cent. Perth marked a slight 0.2 per cent increase and Darwin saw values increased by 1.7 per cent, while Canberra remained steady in April.
“Sydney and Melbourne arguably show a higher risk profile relative to other markets due to their large exposure to overseas migration as a source of housing demand, along with greater exposure to the downturn in foreign students, stretched housing affordability and already low rental yields that are likely to reduce further on the back of rising vacancy rates and lower rents,” Lawless said.
Hobart’s negative growth is largely to do with its high proportion of workers in affected industries like accommodation and the arts and recreation services sectors.
However, Australia’s property market was largely insulated from a broader decline due to the government’s six-month mortgage pause, preventing a surge of distressed sales from entering the property market and lowering prices further.
Additionally, the industries hit hardest - namely accommodation, retail, hospitality and travel - are also - are also the industries with smaller numbers of homeowners. Conversely homeowners are less likely to be employed in an affected industry.
Settled sales fell by around 40 per cent, according to CoreLogic estimates.
“No doubt the coming month will provide more clarity about the direction of housing markets. One of the most important indicators to follow will be measures of consumer sentiment,” Lawless said.
“If consumer spirits start to bounce back to more normal levels, this is when we should start to see housing activity lift from their current low levels.”
Expensive properties under the most pressure
Australia’s most expensive housing markets are also the ones losing value the quickest. The most expensive quarter of homes saw quarterly price gains fall from 6.6 per cent to 2.4 per cent over the three months to the end of April.
Additionally, while mid-tier capital city housing markets recorded a 0.3 per cent increase in value, expensive homes increased only 0.1 per cent.
In Melbourne, the most expensive quarter of homes was the biggest drag on the city’s April result, with this group falling 0.8 per cent in April as the rest of the market actually recorded a slight rise.
Where to from here?
“The Australian version of this global health and economic crisis is only a month-and-a-half old, and it looks inevitable that there will be some downwards pressure on housing values over the coming months. The magnitude of housing value falls depends on a broad range of factors with most hinging on the timing and extent of social distancing policies being lifted,” Lawless said.
Australia has flattened the curve of coronavirus and some states are loosening social distancing restrictions.
“An early return of economic activity should support a lift in consumer spirits which in turn should see housing market activity sparking back to life.”