Housing market ‘not immune’ to coronavirus crisis as cracks show in Sydney and Melbourne markets
Median house price – $1,020,849
Median unit price – $770,469
Median house price – $819,611
Median unit price – $589,042
Median house price – $557,714
Median unit price – $386,427
Median house price – $461,845
Median unit price – $356,868
Sydney and Melbourne house prices increased in March but there are signs of a slowdown following tough restrictions on how real estate agents can sell properties during the coronavirus pandemic.
Sydney's median house prices jumped 1.1 per cent to $1,020,849 and Melbourne's increased 0.4 per cent to $819,611 over the month, CoreLogic data released on Wednesday shows, but a rapid slowdown is expected over April. Open homes and on-site auctions were cancelled in the last week of March as part of government measures to stop the spread of coronavirus.
Property prices tend to change more slowly than other asset prices.Credit:Henry Zwartz
These restrictions prompted forecasts that property values would fall and sales could decline by up to 50 per cent, though some real estate agents have been using more private inspections and digital auctions. Record low consumer confidence also weighs on property prices and sales numbers.
Over the past year Sydney and Melbourne house prices have risen 14.5 per cent and 12.5 per cent respectively.
CoreLogic Asia-Pacific head of research Tim Lawless said the housing markets had now begun to enter a "period of disruption".
"The housing market won’t be immune to a drop in sentiment and weaker economy, however the extent of the impact on dwelling values remains highly uncertain," Mr Lawless said.
"Capital growth trends will be contingent on how long it takes to contain the virus, and whether additional constraints on business or personal activity are introduced."
He said the number of residential property sales would fall "dramatically" over the coming months, due to falling consumer confidence, more unemployed Australians and cautiousness from lenders.
The longer it takes to contain the virus and bring economic operations back to normal, the higher the downside risk to housing values.
"Restrictions on open homes and on-site auctions will compound the slowdown in buyer activity, as would any future policy announcements related to peripheral services such as building and pest inspections, conveyancing and furniture removals," he said.
Hobart was the only capital city that reported a housing value decline in March of 0.2 per cent.
Despite the rising monthly prices, CoreLogic's daily index recorded a negative result on Tuesday, down 0.01 per cent in Sydney and 0.33 per cent in Melbourne, with major cities down 0.12 per cent collectively.
In February, house prices in both major cities surged with double-digit growth amid expectations median prices could outstrip the peak of the 2017 property boom by mid-2020. Sydney prices were up 1.8 per cent over the month and Melbourne house prices increased 1.3 per cent, but Mr Lawless said a slowdown due to the coronavirus outbreak was now likely.
"Considering the temporary nature of this crisis, along with unprecedented levels of government stimulus, leniency from lenders for distressed borrowers and record low interest rates, housing values are likely to be more insulated than sales activity," Mr Lawless said.
"The extent of any fall in housing values is impossible to fathom without first understanding the length of time this health and economic crisis persists. Arguably, the longer it takes to contain the virus and bring economic operations back to normal, the higher the downside risk to housing values."
The median price for Sydney apartments increased 1.1 per cent in March to $770,469, while in Melbourne they jumped 0.4 per cent to $589,042.
In Brisbane house prices increased 0.7 per cent to $557,714 and in Perth house values climbed 0.6 per cent to $461,845.
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