Gear up for two-speed housing market
19 September 2020
Perth and Brisbane are set to pull ahead of Sydney and Melbourne in the house price stakes as the economy gradually recovers from COVID-19.
A two-speed market is likely to emerge as the smaller capitals leverage their affordability and relatively stable economies — well insulated against the pandemic-inspired downturn — to bounce back.
Westpac data suggests several capital city property markets will be more resilient than initially thought, but Sydney and Melbourne – which represent about 40 per cent of Australia’s housing market — will be hit hard.
Between April and June next year, Melbourne is forecast to plunge 12 per cent, while Sydney is expected to fall 5 per cent.
At the same time, Brisbane is expected to dip just 2 per cent, while Perth remains unchanged.
Daily house price tracking by property researcher CoreLogic suggests Perth and Brisbane are already trending up and suggest a likely rise though the month of September.
CoreLogic head of research Tim Lawless anticipates interstate migration to flow from the major capital cities once borders reopen, increasing demand in the coming months.
“It looks like those markets where … the virus has been well and truly contained and more economic activity is getting back to some level of normality … are already starting to respond positively with some very small positive movements,” he said.
Perth is set to stand out over the coming months. Once the country’s most expensive capital city, it is now the cheapest after a prolonged six-year downturn.
First-home buyers Brittani Lea and Matthew Watt, aged 30 and 31, are preparing to build at Cedar Woods' Solaris Private Estate in Forrestdale, south of Perth. The couple said the state and federal grants on offer — totalling about $65,000 — combined with low mortgage rates and affordability meant they were able to act sooner than planned.
“I thought buying was something we’d think about when we have kids down the track. It‘s a big step to take now but something good has to come out of COVID,” Ms Lea said.
“Our biggest issue was finding land because so many lots were sold out.” Demand has been so high, the WA state government announced an additional $30m in funding its Building Bonus grant scheme program, now totalling $147m.
In Queensland, growth areas on Brisbane’s outskirts are reporting a strong increase in land sales over the quarter. Meanwhile, established property prices in the city dropped 1 per cent over the period but this is expected to reverse quickly.
In contrast. Melbourne and Sydney bore the brunt of price falls during the pandemic.
The federal government's HomeBuilder grant scheme for new builds has been largely ineffective in Victoria and NSW. HIA chief economist Tim Reardon said many builders will start to roll back building guarantees to meet the scheme’s March deadline in September due to uncertainty. In Sydney, only 20 per cent of the modest number of total land sales in the past quarter were linked to HomeBuilder.
(Source: The Australian)