The most expensive real estate markets in Australia have experienced the sharpest drop in prices since the start of the COVID-19 epidemic, according to a recent market analysis by CoreLogic.
Eliza Owen, chief of residential research at CoreLogic, said that the response to contain the COVID-19 epidemic had unexpected consequences on the housing market which at the start of the year , was showing signs of an upward trend.
The CoreLogic Home Value Index fell 0.4% in May. However, performance varied by region.
"According to historical cycles, the more expensive parts of Sydney and Melbourne appear to be leading the current recession. The more expensive parts of the Sydney and Melbourne markets have higher levels of volatility and are sometimes a" prime engine "" with respect to the direction of the price change, "said Owen.
The city center and the eastern suburbs of Melbourne recorded the largest decline in the metropolitan area. In the capital of New South Wales, Northern Beaches, North Sydney and Inner West have recorded declines in the past two months.
Read also: Large cities exposed to falling rents?
Owen said that continued declines should persist in downtown markets that depend on international migration for demand for housing.
"However, as the broader economic downturn slows demand for housing, slight price reductions are expected to spread, resulting in a more general slowdown in the next 12 months," she said.
Citing a study by the Reserve Bank of Australia, Owen said that expensive markets are the most responsive and volatile in response to changes in the cash rate.
"The performance of the real estate markets in the midst of COVID-19 suggests that the high end of the market could also be more sensitive to negative economic shocks," she said.
What is surprising with the CoreLogic data, however, is that one of the regions that recorded the largest drop in values ??was not Sydney or Melbourne but of Perth.
Mandurah, a city on the southwest coast of Western Australia, recorded a decline in value of 2.2% over the period from March 31 to May 31. Current values ??in the region were 38% below their 2001 peak.
This decline is explained by a longer-term downward trend in the region. In fact, Owens said that Mandurah was not particularly sensitive to the shock of demand due to a drop in overseas migration. This suggests that demand conditions were already fragile in the region before COVID-19.
If there was a region in Perth more exposed to the weakness of international migration, it would be the Southeast region. Values ??in this region declined 1.2% between March and May.
"International border closings in response to COVID-19 may have created a significant demand shock that had interrupted a recovery in the Perth – Southeast region. Prior to that, housing values ??in the region had experienced four consecutive months of growth between December 2019 and March 2020, "said Owen.
Main suburbs:
marrickville
,
leumeah
,
spring wood
,
lambton north
,
tweed heads south
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