The price decline due to the COVID-19 pandemic is not as "dramatic" as some early market watchers have predicted, pointing to stable conditions in the housing market, according to a report from the Real Estate Institute of Australia.
The median price for houses across capital cities decreased by only 2.2% to $770,359 over the June quarter, according to REIA's Real Estate Market Facts report. This is the first quarterly decline since March 2019. On an annual basis, house prices in capital cities remained strong, up by 5.9%.
"While there has been an impact on prices, it is relatively modest and has certainly not been the doomsday prophesies some commentators expected. Nor has the impact been uniform across Australia with local market conditions varying, resulting in a range of outcomes," said Adrian Kelly, president of REIA.
Kelly said the decline in the number of listings for sale helped insulate the potential price decline.
"In all capital cities except Perth the number of houses and other dwellings for sale declined compared to the June quarter 2019. The biggest declines were in Hobart, where the number of houses for sale declined by 33% and the number of other dwellings by 26%," he said.
The decline in listings continued in August. The latest figures from SQM Research revealed a 6.3% monthly drop in property listings in the month. This decline came off the back of a “somewhat abnormal” 3.8% rise in July.
Kelly said government initiatives have also helped boost confidence amongst property buyers and sellers, resulting in an improvement in market conditions.
"The market is holding up better than many expected with the government's initiatives of JobKeeper and JobSeeker as well as the banks loan deferrals playing their part in stabilising the situation. With extensions to these having been announced we expect continued stability in the market," he said.
A similar study by Knight Frank revealed that house prices across Australian markets grew by 6.1% over the 12 months to the end of June. Over the first six months of 2020, prices have only declined by 0.4%. This helped Australia move 37 places up the global rankings for housing market performance.
"Australia has dealt with the COVID-19 pandemic better than some other countries and territories around the world, with the length and severity of the lockdown not as strong, which partly explains its stable performance," said Michelle Ciesielski, head of residential research for Australia at Knight Frank.
Sarah Megginson, managing editor of Your Investment Property, Your Mortgage, and Australian Broker, said doomsday forecasts on property prices are unlikely.
"Our government won't allow property prices to collapse by 40%. They will step in with regulatory change, tax reform, grants and subsidies, infrastructure investments and other measures first," she said. "Look at how the federal government has stepped in since the pandemic began causing economic carnage in March: billions of dollars in grants, subsidies, lifelines and projects have been announced."
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