Housing values across the country turned a corner in October as the impact of coronavirus on the property market continues to defy expectation.
For the first time in four months, the combined national dwelling value rose, up 0.4 per cent, now just -0.1 per cent down on the quarter.
It follows four months of much softer declines than forecasted. The combined national dwelling index had contracted -2.2 per cent declines began in May, not accounting for October's growth.
Only dwelling values in Melbourne (-0.2 per cent) failed to tick in to the positive, but they've seen a sharp rise since -0.9 per cent declines last month and a -1.2 per cent declines over August.
Their October declines were also primarily driven by houses, with units values growing 0.3 per cent compared to units scaling back -0.1 per cent.
Values in Sydney grew 0.1 per cent, following a -0.3 per cent September decline.
The best performing capitals over September were Adelaide and Darwin, both seeing 1.2 per cent growth, closely followed by Hobart and Canberra, both up one per cent.
Perth continued its recovery, up 0.6 per cent following 0.2 per cent September gains, while Brisbane was consistent with a further 0.5 per cent growth, the same as last month.
CoreLogic's head of research Tim Lawless says noted that the lift in home values coincides with a range of other indicators that have also improved over recent months.
“Consumer confidence has consistently improved since the virus curve has once again flattened and Australians respond positively to measures announced in the federal budget.
"In October we saw an 11.9% surge in the Westpac-Melbourne Institute consumer sentiment index, rising clearance rates and an increase in valuation for purchase orders.
"Alongside this we are seeing persistently low advertised stock, which has supported price growth. “
Houses v Units
Nationally houses are performing better than units, with capital city house values rising 0.4 per cent over October compared with -0.2 per cent declines in units.
The biggest difference was in Sydney, where house values jumped 0.5 per cent and units contracted -0.5 per cent.
Adelaide's housing market (1.2 per cent) outperformed its units (0.9 per cent), as did Brisbane (houses +0.6 per cent, units -0.1 per cent) and Perth (houses +0.6 per cent, units +0.4 per cent)
CoreLogic's head of research Tim Lawless says the October results show early evidence of a divergence between house and unit market performance.
"Through the COVID period so far, unit values have actually shown a smaller decline in values than houses, but this is likely to change.”
“Almost two thirds of Australian units are rented, and rental conditions have weakened, especially in the key inner city precincts of Melbourne and Sydney.
"These areas have a higher concentration of unit stock, and historic exposure to demand from overseas migration. Low levels of investment activity, relatively high supply of unit stock in inner-cities and international border closures are key factors that imply units will under-perform relative to houses over the medium term” Lawless added.
How has the property market in 2020 actually faired?
Experts and economists were forecasting housing markets to fall as high as 30 per cent in some worst case scenarios at the start of the COVID-19 pandemic, but the vast majority were predicting around 10 per cent losses in Sydney and Melbourne.
In May ANZ Research forecast the national housing decline will reach -10 per cent, before seeing a modest recovery in late 2021.
They predicted the biggest declines to be felt in Sydney, Melbourne and Hobart, all with -13 per cent declines.
But by next month it is looking as if all capitals will be showing positive growth on the back of resilience of the market, with the combined national dwelling values down -2.2 per cent since the first declines in May.
Over 2020 only Melbourne (-2.9 per cent) and Perth (-0.3 per cent), have seen values fall.
* Source - Property Observer - Joel Robinson
The best performer so far has been Canberra, where values are up five per cent year to date, driven by 5.5 per cent growth in house values.