Australian house prices resilient in COVID-19 downturn: Hotspotting's Terry Ryder
EXPERT OBSERVER
The stubborn resistance of house prices to the negative forces on the pandemic, and the economic downturn it has created, is shown by the month by month data from CoreLogic – with the latest figures published today (3 August).
An analysis of the monthly figures for the past five months covering the pandemic period shows that - generally speaking - there has been a gradual deterioration in price outcomes. Looking at the average national result, house prices were up 0.7% in March, up by a smaller amount in April, down marginally in May, down by a larger amount in June and then a similar, though slightly better, result in July.
But looking at the figures at a more local level shows that some locations have been more resilient than others. The latest figures show that half the market jurisdictions managed to produce some level of growth in their house prices during July.
The “jurisdictions” are the eight capital cities and the seven state or territory regional markets. Of those 15 jurisdictions, seven produced some level of growth in house prices in July. Remarkable in the circumstances.
Those figures illustrate a point I have making regularly in recent months: that regional markets are generally doing better than capital city markets.
In July, five of the seven regional jurisdictions produced house price growth, compared to two of the eight capital city markets.
The figures from the past five months deliver other important messages. One is that month-to-month figures can be highly erratic and we need to be careful about placing too much significance on one month’s results.
In Darwin, for example, house prices rose in April, fell in May, rose in June and fell in July (according to the CoreLogic data - other sources have different figures).
In Hobart, house prices rose in March, fell in April, rose in May and June, then fell in July. Again, if you believe the CoreLogic figures.
Another message in the data is that we don’t have a single market in Australia. We have many different markets with different outcomes from one market to the next.
That’s an important point because media will report that Australian property prices fell in July, when in reality there were price rises in Canberra, Adelaide and five regional jurisdictions. Again, according to these figures.
Looking at the longer-term patterns, some markets stand out for their consistency and strong resistance to the national economic forces.
Canberra has delivered some level of growth in each of the past five months. This tends to confirm our view that the national capital is the most Covid-proof city in the nation.
Adelaide has also shown great consistency, with small rises in four of the past five months, including in July. This confirms my positive opinion about the solidity of this under-rated city.
Two of the regional markets, South Australia and Tasmania, have delivered price growth in all of the past five months. And two others - NSW and Queensland - have achieved growth in four of the past five months, including during July.
Central message: prices have not collapsed anywhere and some places continue to grow.
It’s a different message to one delivered by mainstream media. One major newspaper has reacted to the latest figures with the claim that they show that house prices are “plunging” right across Australia.
Nothing of the sort is happening.
The CoreLogic figures indicate that house prices are higher than they were a year ago in 11 of the 15 market jurisdictions.
That simple truth demonstrates that the forecasts back in March-April of a dramatic and immediate collapse of house prices was sensationalist nonsense.
Terry Ryder is the founder of hotspotting.com.au
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