Australia’s housing values recorded a drop for the second consecutive month in June, with the impact of Covid-19 on the nation’s property markets milder than expected, shows the latest CoreLogic figures.
But the recent rise of active cases in Victoria is a reminder that a second wave of the pandemic remains an ongoing risk.
Five of the nation's largest capital cities recorded a decline in home values over the month, with Melbourne recording a drop of 1.1 per cent, Perth 1.1 per cent and Sydney 0.8 per cent over June.
Hobart, Canberra and Darwin recorded a slight rise in values over the month.
With capital city dwelling values falling a cumulative 1.3 per cent during the past two months, Corelogic’s Tim Lawless says the downwards pressure on home values has “remained mild to date”.
^ Source: CoreLogic
While the decline in Australia’s housing market has been mild since April, Lawless says the longer-term outlook remains highly uncertain.
“Despite the early signs of improved economic activity and a lift in housing turnover, the downside risk remains significant,” he said.
“The recent rise of active virus cases in Victoria are a reminder that the potential risk of a second wave remains a stark reality. If we see the virus curve steepening rather than flattening, a return to restrictive policies is highly likely.”
CBA economists expect Australia’s dwelling prices to fall around 10 per cent as a result of the pandemic's impact on rising unemployment and lower net overseas migration.
“Given the huge negative shock to the economy caused by Covid-19 it’s hardly surprising that prices have eased,” CBA economist Gareth Aird said.
“Indeed what has surprised us is that prices have only contracted nationally by ~1 per cent since March,” Aird said.
Lawless expects the longer-term outlook for Australia’s housing market is largely dependent on how well the economy is tracking when government’s support measures are taken away.
“While it’s encouraging to see lenders have recently hinted at an extension in their repayment leniency policies, the government stimulus will eventually taper and banks will require borrowers to repay their loans,” he said.
“Eventually the economy and borrowers will need to abide by market forces. This is when we could see a rise in mortgage arrears and the potential for a lift in urgent or forced sales.”
Over the year, Sydney and Melbourne have rounded out the fiscal year with double-digit growth.
Sydney home values recorded 13.3 per cent growth over the year, Melbourne recorded 10.2 per cent and Brisbane a 4.4 per cent rise.
Sales activity shows an improvement from April’s low.
After a 21.5 per cent increase in sales activity in May, CoreLogic estimates home sales in June was up a further 29.5 per cent.
The data house says a scarcity of advertised supply is one factor helping to insulate home values, estimating the sales to listing ratio is tracking around 1.3.
“This means that for every new listing to the market there are 1.3 sales,” Lawless said.