As the world focuses on containing the COVID-19 pandemic I hope that you and your families remain well and safe.
Housing markets have been impacted by the sudden weakness in economic conditions and a plunge in consumer sentiment, however, there has been a significant contrast between housing values, which have shown some resilience to falls, and market activity which has dropped sharply through the second half of March and April.
Most regions recorded a rise in home values through April, however, the monthly of growth more than halved, dropping from 0.7% in March to 0.3% in April, which was the smallest month on month movement since July last year, when the national index was flat over the month.
The six months prior to March saw national housing values rising at the average rate of 1.1% per month, highlighting how fast the growth has left the market.
Although housing values were generally slightly over the month, the trend has clearly weakened since mid-to-late March, when social distancing policies were implemented and consumer sentiment started to plummet.
The sharpest reversal in growth conditions can be seen in Melbourne, where housing values nudged into the negative territory through April, down 0.3%.
Growth in Sydney values has also slowed sharply but remained positive, rising 0.4% over the month.
To provide some context, the six months prior to March saw both cities averaging a nation-leading monthly growth rate of about 1.7%.
Hobart has the most exposure of any capital city, at least proportionally, to the industry sectors that are most heavily impacted by COVID-19 in terms of employment, with 12.7% of the workforce employed in the accommodation & food services sectors, and the art & recreation sectors.
Despite the weakening in housing market conditions, some cities have outperformed the six-month average.
Perth, for example, saw values rise by 0.2%, Adelaide was up 0.4% and Darwin values were 1.7% higher over the month.
Each of these cities has shown a larger gain relative to the six-month average in April, demonstrating some resilience to weaker conditions.
Other indicators of housing market conditions haven`t been as resilient.
CoreLogic estimates of settled sales plunged by around 40% in April as buyers retreated to the sidelines and listing numbers dried up.
The substantial drop in sales activity is supported by a similar fall in the number of mortgage-related valuation events across the CoreLogic platforms, which account for about 85% of lender valuation instructions.
Additionally, activity across CoreLogic`s ‘RP Data’ platform, where the large majority of real estate agents undertake their research to prepare a property for sale, was down by about 60% prior to Easter, providing a firm signal that industry activity has been hit hard by the drop in active buyers and sellers as well as policies preventing open homes and on-site auctions.
Encouragingly, real estate agent activity did show a partial bounce back after Easter to level out around 40% below the same time a year ago.
The decline in real estate activity is also showing up in the number of new listings being added to the market which was tracking about 35% lower at the end of April relative to the same time a year ago and 43% below the five-year average.
The reduction in advertised stock levels at a time of low demand is one factor that should help to insulate housing values from a more material downturn.
from Property UpdateProperty Update https://propertyupdate.com.au/national-housing-market-update-australia/
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