How Coronavirus has affected the housing market in 2020

How does the COVID-19 downturn compare to previous property downturns?

As shown in the below graph, the coronavirus impacts on the housing markets shows declines that appear to be in line with previous periods of recessionary conditions.

Labour force conditions have become more relevant in understanding price movements

A look at coronavirus and the housing market: how has coronavirus affected the housing values across capital cities.

August and September have seen an improvement in the 28-day value change across the largest cities.

Using the Corelogic daily hedonic index, used as a quality benchmark for accurately measuring value changes across the Australian housing market², the below graphs show us that after the early stages of the coronavirus pandemic this year, in most states, excluding Victoria, capital cities are starting to see a slight increase across property values. 

Sydney

The Sydney housing market has experienced a drop from March to July, although in August experienced an upswing. In the 28 day change from August to September, Sydney experienced a slight decrease of 0.3%, although this drop is still above the previous lows experienced during covid. 

Melbourne

The below graphs indicate that Melbourne property market has been hit the hardest due to covid, this can be attributed to the extended lockdowns occurred in Victoria from June to late October. Although the Melbourne hedonic index did not drop significantly further from the decline in May, it did not experience the same upward trend that can be seen across other capital cities.

Brisbane

As shown below the Brisbane housing market has not experienced the same lows as Sydney and Melbourne and in the 28 day change from August to September the city has seen a 0.4% increase in their CoreLogic daily hedonic index. 

Adelaide

Similar to the trends seen in the Brisbane market, Adelaide has experienced a similar drop and subsequent increase and has seen an overall increase of the 28 day change from August to September of 0.6%. 

Perth

As outlined below, the Perth property market has experienced a drop in their daily hedonic index slightly later than the other capital cities, however the increase in Perth appears to have occurred in a similar fashion to Brisbane and Adelaide. 

The major regional centres are outperforming their capital city counterparts through COVID but are losing momentum

Restrictions have reduced transaction activity. While this has proven a pain point for many industries, it may have contributed to the relatively orderly decline in property prices.

Key statistics on COVID-19’s affect on home sales: 

• The volume of home sales was hit much harder than housing values. 
• National home sales fell by around 33% in April following a 5% dip in March. 
• National volume estimates have nudged lower over the past two months with conditions varied across the regions.

The start to the spring selling season was subdued, as vendors have been reluctant to sell during periods of high restrictions

Total listings also remain low, as sales volumes rebounded at a relatively strong rate

Melbourne auction volumes reached new record lows, while  Sydney auction numbers and the clearance rate is gradually trending higher

Mortgage repayment deferrals have supported the housing market amid severe job loss. 

The latest data suggests more people are now switching to a repayment plan.

Lending conditions were more conservative in the June quarter despite lower rates. A smaller portion of loans were funded on high LVRs, and on interest-only terms.