The summertime selling season of early 2020 indicated Australia’s capital cities were set to undergo the quickest market recovery on record, that was until Covid-19 halted any sign of positive trends. Now just over the halfway mark of 2020 we are met with a gloomier outlook, with CoreLogic indicating median property prices are not expected to return to 2017 levels until as late as 2025.
Housing values in our capital cities combined went up 10.3% over 10 months from midway through 2019 before the pandemic caused a shutdown in March, and property prices Nationally have fallen two months in a row. Previously, the fastest housing rebound on record occurred between 1983 and 1984, following a recession in the early 1980’s. In this period, prices recovered by 10.5% over 11 months, as illustrated by the graph below.
The current median property price in Sydney sits at $875,749, according to CoreLogic, which is below the June 2017 peak of $907,963. In Melbourne, figures demonstrate a 1.9% drop since February, with their median property price sitting at $683,529.
It is heavily debated as to how damaging this will be in the short term. AMP Capital economist Shane Oliver suggests the downside definitely remains ahead of us, predicting the shock from the coronavirus will be worse than the recessions of the early 80’s and 90’s. Shane Oliver believes a 10% drop in Sydney and Melbourne property prices will happen before things appear to look up, although there is a risk these figures may be greater if Melbourne remains locked down, and if the same conditions ensue for Sydney.
According to Fitch Ratings, other countries that are expected to experience a fall in house prices for the remainder of 2020 are the UK and Spain, although analysts consider the sales volumes to recover from as soon as next year, causing prices to stabilise.
There is no doubt the threat of a second-round lockdown plays as disadvantageous to consumer confidence and the economy as a whole. As it stands in our local market, we are seeing positive activity for both sellers and buyers, with balance and consistency. If you would like to chat about how we can assist you with your plans, feel free to reach out on 02 4504 8004.