The Australian Capital Territory (ACT) has managed to record housing value growth amid the COVID-19 pandemic, reversing the trend seen in some of the nation's largest housing markets. What could be the stability of ACT?
The value of ACT properties has increased 1.3% since the end of March. Eliza Owen, Head of Residential Research at CoreLogic, said that while this could be considered an anomaly given the overall downtrend, it was actually just an impact of the rate of record cash flow.
"RBA research noted that cuts in the cash rate generally increase property values ??over time as debt becomes cheaper and ability to buy increases," he said. she declared.
Read also: Slowdown in the fall in prices?
Owen stated that the ACT housing market was likely supported by favorable conditions in the labor market. In fact, figures from the Australian Bureau of Statistics show that the number of finance and insurance jobs in ACT has increased 0.7% since the start of the pandemic.
"This market has likely been supported by the relative stability of employment in industries where workers have higher incomes and are more likely to be potential owners or buyers", a- she declared.
At the same time, ACT experienced the highest rate of decline of any state and territory in the accommodation and food services labor market, which has been hit the hardest. by the COVID-19 epidemic.
"This industry is more likely to be made up of tenants, and rental values ??have fallen half a percent across ACT since March, with declines largest in the housing sector, ”said Owen.
Conversely, Melbourne reported the largest drop in property values ??since March at 3.5%. This drop could be explained by two factors. First, the city's real estate market is exposed to volatile growth rates, especially given its high level of gains during the recent recovery.
Additionally, Owen said there had been a substantial demand shock in the Melbourne real estate market with international borders closed amid the outbreak. The city previously had the highest level of net migration abroad from capital markets.
The same can be said of Sydney, which received the second highest volume of net interstate migrants in 2018-2019. Property values ??in Sydney have fallen 1.7% since March.
One of the most immediate concerns over housing values ??will be the impact of the second lockdown in Victoria. Considering the state's share in the Australian economy, the Fourth Stage lockdown has already driven sentiment among consumers and businesses nationwide.
"As federal government budget support grows from about $ 18 billion per month to about $ 3 billion as of October, housing market conditions will be tested more widely. This is when we will likely see an increase in the number of households facing financial hardship, and an increase in urgent sales, "she said.
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