House prices bounce in September, except for continued falls in Melbourne and Sydney
House prices have fallen nationally over September, but rose everywhere except the two big markets of Melbourne and Sydney.
CoreLogic’s national home price index showed a 0.1 per cent fall last month, but that was entirely driven by a 0.9 per cent slide in Melbourne and a 0.3 per cent decline in Sydney.
“That speaks to some of the affordability constraints across these cities, compounded by the job loss and income loss that we’ve seen through COVID-19, as well as the fact that those cities have more exposure to overseas migration,” CoreLogic’s head of research for Australia Eliza Owen said of the falls in the two largest capitals.
Outside those two big cities, the other capitals posted increases, as did most markets outside the metropolitan areas.
However, Sydney and Melbourne account for around 40 per cent of the nation’s homes and more than half the home values, meaning their declines pulled the overall index slightly lower.
Ms Owen said that, even in the falling Sydney and Melbourne markets, there are green shoots for the property market emerging in spring.
“There’s been a really interesting turn in market sentiment over September,” she said.
“We’ve started to see a lift in consumer sentiment, typical auction clearance rates, new listings are finally starting to rise — up about 9 per cent over the month.”
While it might seem counter-intuitive that property prices are rising during a pandemic that has triggered Australia’s sharpest recession in 90 years, Ms Owen said the role played by cheap mortgages should not be overlooked.
“Negative economic shocks also bring lower interest rates,” she said.
“When that credit is cheaper, it means that people who do still have their jobs and income intact might be more inclined to make that decision to purchase property as the debt is quite cheap at the moment.”
In general, houses outperformed apartments, with prices steady nationally last month versus a 0.3 per cent fall for units.
Unit rents have also dramatically underperformed house rents during the pandemic, slumping 3.3 per cent nationally since March 31, versus a 0.4 per cent rise in house rents.
However, both units and detached houses in regional areas had rental increases over that six-month period, in contrast to rental falls in the city.
With work from home much more commonplace and restrictions on many of the activities that favour city living still in place in some areas, analysts have observed a trend towards outer-suburban and regional living — a move that is obviously much quicker to make for renters.
“Regional market performance has been quite impressive, particularly across New South Wales, where we see that dwelling values were up about half a per cent over the month, they’re now up almost 6 per cent over the year,” Ms Owen observed.
“Similarly with areas outside of Brisbane in Queensland, we can see that market is also up about half a per cent over the month as well.
“Regional Victoria is with some areas declining in the wake of restrictions.”