While the COVID-19 outbreak has affected the performance of most capital cities in terms of rising house prices, one market appears to be a "disruptive player," according to CoreLogic.
Canberra, in the Australian Capital Territory, appears to be the "clear winner" among the capitals, said Eliza Owen, head of residential research at CoreLogic. Between the end of March and the end of July, the value of homes in the ACT real estate market rose by 1.3%, which goes against the 1.4% decline in values. national housing.
"While it may seem counterintuitive for prices to rise across ACT in the midst of a global pandemic, the real estate market is actually running smoothly. expect it when the cash rate is reduced, "Owen said.
Previous research by the Reserve Bank of Australia has shown that for every one percentage point reduction in the cash rate, property values ??can increase by 8% over the next two years. . Currently, the spot rate is at its effective lower limit of 0.25%.
However, in terms of housing segments, the ACT housing market is doing better than its unit market. In fact, home values ??in the Territory hit an all-time high in July, increasing 8.5% over the year to settle at $ 721,912.
In contrast, unit values ??in July were 3.6% lower than the record set in May 2010. Still, median unit values ??rose 2.7% to $ 445,135.
The supply of units through the ACT had shown no signs of moderating before the start of the COVID-19 pandemic, according to CoreLogic data.
Unit completions across the territory even hit a record high in March, reaching 4,427. The volume of units built from the year to March was actually 41.8% more high than last year. It was also 73.8% higher than the decade average.
Owen said ACT appears to be relatively isolated from some of the effects of the pandemic.
"Part of the reason for this may be that the number of recent cases has been low or non-existent. At the start of August, restrictions on social distancing were relaxed throughout territory and ACT had gone almost a month without reporting any new active cases ". she says.
However, as property values ??continued to rise in the ACT, rents began to decline. Owen said this could be due to better employment conditions in the capital region, with people more likely to buy property.
Nonetheless, Owen believes ACT may experience a delayed slowdown as the economic impact of Melbourne's second lockdown becomes broader.
"Investor demand, while already low relative to the Australian-wide stake, may also be affected by falling rents. As a result, the continued growth of this market will depend on how quickly Australia can remove new cases of the virus, and see the labor market recover, "she said.
In a previous analysis, Owen said that ACT's performance was opposite to that of Melbourne. The latter reported the largest drop in property values ??since March at 3.5%. This decline could be explained by two factors: its exposure to volatile growth rates and the significant demand shock due to the closure of international borders.
“As federal government budget support increases from around $ 18 billion per month to around $ 3 billion as of October, housing market conditions will be tested more broadly. This is when we will likely see an increase in the number of households facing financial hardship. and an increase in urgent sales, "said Owen.
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