House Prices Continue to Rebound

House prices across the country continue to rebound, with the latest data showing that values are trending higher across all the capital cities in Australia.

When COVID-19 first hit in Australia in March 2020, media pundits and even the big banks predicted price falls of more than 30%.

However, since the 100^th case of COVID-19 in Australia, not only have prices not fallen dramatically, but in six of the eight capital cities, they have actually increased sharply.

Source: CoreLogic

In March of 2020, Melbourne, Sydney, Perth, Brisbane and Hobart all saw some slight price falls when the coronavirus first hit. But by the end of the year, housing values in Perth, Brisbane and Hobart were higher than in March 2020, and they appear to be trending higher.

Home values in Darwin, the ACT and Adelaide have been increasing steadily since March, with the trend in Darwin particularly strong, having risen by 8.3% since the pandemic began.

Outside of the capital city areas, there are plenty of regions that have also seen strong price growth. For example, the NSW Central Coast has been a popular market throughout 2020, seeing values on the increase by 6.5% through to December.

For many of the capital cities, it is clear that the bottom of the property market was reached around July or August of 2020, with only Melbourne lagging behind.

Melbourne was the hardest-hit capital city property market in Australia, thanks to widespread lockdowns that occurred throughout two different periods. Based on the CoreLogic data, we can see that the bottom of the Melbourne property market was reached around October, and since that time, prices have been trending higher.

The overall property market was propped up through a combination of record-low interest rates, as the RBA slashed the cash rate to 0.1%. State and federal governments both introduced a range of incentives, and stamp duties, aimed at supporting the market and boosting jobs, were released. There was also a clear push from expats looking to return to Australia, which came away relatively unscathed by the COVID-19 pandemic.

The gains in prices increased throughout 2020, culminating in dwelling values, rising by 1.0% across the nation in December. According to CoreLogic, over the course of 2020, house prices increased by 3.02%, with the combined capital cities up by 2.0%.

The strongest capital city property markets in Australia in 2020 were Darwin, Canberra and Hobart, which increased by 9.0%, 7.5% and 6.1% respectively.

The regional areas of Australia were some of the strongest performers, surpassing many of the major capital cities and finishing the year 6.9% higher.

CoreLogic also notes that as we move into 2021, more markets are likely to go into recovery mode. This is expected to persist as long as economic conditions continue to recover, and mortgage rates remain at record lows.

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