New research has shed light on the current state of the residential real estate market, noting the worst is likely behind us as restrictions begin to ease and onsite property inspections open up.
CoreLogic head of research Australia Eliza Owen has just released the findings from the March Quarterly Property Market & Economic Review, showcasing how the residential real estate market was impacted by COVID-19 and what’s likely to come as we look forward.
According to the findings, the most impactful restrictions on Australian real estate commenced between 20 and 25 March. This is when the closure of Australian borders commenced, as well as the shutdown of non-essential services, a ban on open real estate inspections and onsite auctions, and limiting public gatherings to two people.
“By mid-May, onsite auctions were reinstated in most states and territories, and property inspections are gradually opening up. But new housing demand is likely to see a continued decline, as borders remain closed to overseas migration and unemployment rises,” Ms Owen said.
According to Ms Owen, to date, housing values have only shown a mild slowdown.
“By early May, capital city housing values fall by less than half a per cent over a month, led by Melbourne, where values are down about half a per cent,” she said.
Sales volumes and listing data
As part of its research, CoreLogic modelled sales volumes. Its findings suggest that across Australia, residential property sales declined about 40 per cent over April.
“The magnitude of decline was fairly uniform across different parts of the country, and was driven by a decline in consumer confidence,” Ms Owen explained.
Further, CoreLogic’s data on listings shows the amount of stock available for sale is approximately 25 per cent lower than it was around the same time last year.
“The low level of listings signals a tough period for those developing and selling residential real estate. But it also signals a lack of distressed sales flooding the market. In other words, not many people are selling, because not many people have to sell,” Ms Owen said.
“It is likely that reprieve on mortgage repayments has protected people from distressed sales, at a time of rising unemployment, falling wages and falling numbers of hours worked.”
According to CoreLogic and Ms Owen, rent prices are likely to be more affected than property prices.
“Another pain point in the real estate market is rents,” Ms Owen said.
“CoreLogic recorded a -0.4 [of a percentage point] decline in rent prices nationally across Australia over April, led by Hobart, where rents declined [by] -1.1 per cent.
“Rental markets have been particularly dampened by falls in employment. This is because jobs have fallen by about a third across accommodation and food services, and arts and recreation services.
“These are industries where workers are generally young, on less income and are more likely to be renters.”