Australian property market update - November 2020

By Craig Gibson

With Chrissie and the holidays within sight, it’s time to take a look at how the Australian property market fared over November 2020. 

There hasn’t been much to celebrate this year, but we are happy to report that a housing price recovery is well underway and the economy is bouncing back faster than expected. 

With the virus in remission, state borders opening, social restrictions lifting and CoreLogic’s national index up +0.8% over the month - Chrissie is looking a lot more festive than it was six months ago. This good news comes after a COVID-induced dip in home values between April and September, when the market dropped -2.1 per cent. 

 
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The Australian Bureau of Statistics also reports that GDP rose +3.3 per cent in the September quarter, which it puts down to continued easing of restrictions. While we certainly aren’t out of the woods yet, consumer sentiment has and continues to improve - and life seems to be returning to near-normal. 

Now let’s look back at how national property values performed over the past month in more detail, identify where the strongest and weakest housing conditions are - and what the months ahead could hold.

National property values: November 2020

Houses
$585,167
Monthly change: +1.1%
Units
$519,386
Monthly change: +0.2%

According to CoreLogic’s Hedonic Home Value Index for November, national dwelling values have continued to recover, up +0.8 per cent for a national median property value of $565,474. 

This makes them positive +1.1 per cent for the quarter and +2.0 per cent for the year to date (YTD). This is the second consecutive monthly rise, with dwelling values rising across every capital city and rest-of-state regions. Brisbane, Adelaide, Hobart and Canberra all recorded new record highs in November, while Sydney and Melbourne have regressed to 2017 levels.

Dwelling values rose across every capital city and rest-of-state region, with Brisbane, Adelaide, Hobart and Canberra all recording new record highs in November

Overall, houses are leading the charge, up a respectable +1.1 per cent over the month, +1.5 per cent for the quarter and +2.4 per cent for the YTD. Units are a little softer, slightly down -0.2 per cent for the quarter, though up +0.6 per cent for the YTD.

The other trend to note is that regional areas have consistently outperformed capital cities during the pandemic, with a monthly growth rate doubling that of metro markets. The standout regional area up +1.7 per cent in the seven months since March was Launceston and North East Tasmania, posting the highest yearly growth of +10.5 per cent over the 12 months to October. 

Combined regional markets were up +1.4 per cent over November to +2.8 per cent for the quarter and +5.7 per cent YTD for a median dwelling value of $411,129.

 
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Sydney and regional NSW

Houses
$1,000,170
Monthly change: +0.9%
Units
$728,168
Monthly change: -0.7%

Overall the Sydney property market maintained the positive trend it set over October, rising +0.4 per cent for a median dwelling value of $860,967. Houses continue to outperform units, and are up +0.9 per cent over November to a median value of  $1,000,170. 

CoreLogic points out that its data is recording, “a stronger recovery trend across the upper quartile, where values were up 0.6% in November compared to the 0.3% lift in lower quartile values.”

 

 

House values in Sydney broke through the $1 million barrier in November, reaching a median value of $1,000,170

Unit values continue to soften, down -0.7 per cent over the month. This is partly due to the ‘flight from the cities’, but also as a result of job losses in demographics who typically rent, as well as an absence of international students and low investment activity.

The ABC calls this a, “major deterioration in rental markets”, especially in the inner city of Sydney where oversupply was already a pre-pandemic factor.

Regional NSW property prices

Houses
$508,577
Monthly change: +1.5%
Units
$417,696
Monthly change: +0.8%

Overall the regional market in NSW has risen +1.4 per cent over November, +1.4 per cent for the quarter and a whopping +6.5 per cent for the YTD for a median dwelling value of $491,862. 

Houses in the NSW regional markets lead the charge, up a healthy +1.5 per cent over the month - for a median value of $508,577.

Units, which are a smaller part of the market in regional areas, are still up +0.8 per cent for the month and +4.5 per cent for the YTD.

The standout performer for the regional unit market is the Southern Highlands and Shoalhaven area, which recorded the highest yearly growth of +8.4 per cent.

The standout performer for the regional unit market is the Southern Highlands and Shoalhaven area, which recorded the highest yearly growth of +8.4 per cent

Melbourne and regional VIC

Houses
$790,543
Monthly change: +0.6%
Units
$568,056
Monthly change: +0.7%

Overall the Melbourne market appears to be turning a corner, up +0.7 per cent over November. It is however still down -0.4 per cent over the quarter and -0.9 per cent for the YTD, for a median dwelling value of $672,172. 

This is due to the extended restrictions the state endured, after enduring a second wave that restricted overall market activity. For this reason CoreLogic reports that, “Melbourne home values remain at levels similar to those seen in early 2017,” and -5.4 per cent below their recent highs.

 

Overall the Melbourne market appears to have turned a corner, up +0.7 per cent over November

Houses have slightly underperformed compared to units over the month, advancing +0.6 per cent over the month, with units up +0.7 per cent. Like Sydney, the upper quartile of the market in Melbourne is beginning to stage a recovery (+0.7 per cent over November), though it is still down -7.9 per cent March 2020 values. 

In a sign that the market is keen to resume activity, SQM Research reports that the total stock on market is currently at its highest level in six years, and up +1.2 per cent on October levels.

Regional VIC property prices

Houses
$430,479
Monthly change: +1.3%
Units
$297,988
Monthly change: +1.2%

Unlike metro Melbourne, regional Victoria has not seen its markets impacted in any detrimental way, advancing +1.3 per cent over the month, +1.8 per cent over past quarter, and +3.7 per cent for the YTD. 

According to CoreLogic data that analysed Australia’s largest regional areas, over the 12 months to October, houses in Ballarat spent just 29 days on the market - a nationwide record.

Brisbane and regional QLD

Houses
$568,629
Monthly change: +0.7%
Units
$388,661
Monthly change: +0.2%

Brisbane’s market advanced +0.6 per cent to leave it up +1.5 per cent for the quarter and +3.2 per cent for the YTD. 

The median dwelling of $515,267 continues to be a drawcard for interstate buyers, as they flee dense urban living and much higher asking prices in Sydney and Melbourne. 

This is reflected in a resilient property sector that has weathered the pandemic comparatively well.

Regional QLD property prices

Houses
$407,476
Monthly change: +1.5%
Units
$374,075
Monthly change: +1.8%

Regional Queensland is the standout area nationally, posting a rise in values of +3.2 per cent over the past three months, and +5.4 per cent for the YTD.

Houses continue to perform strongly over the medium to long term, though over November units grew faster advancing +1.8 per cent.

Hobart and regional TAS

Houses
$535,786
Monthly change: +1.7%
Units
$414,966
Monthly change: +0.3%

 

Hobart’s market continues its recovery, up +1.4 per cent over the month, +2.9 per cent for the quarter and +5.6 per cent for the YTD. Property values in the Tasmanian capital are now at record levels, a trend that open borders and renewed investor activity could fuel further.

Regional TAS property prices

Houses
$352,089
Monthly change: +1.8%
Units
$271,312
Monthly change: +3.4%

Regional Tasmania has been a property darling before, most recently in 2017 when it and the entire island seemed to be crawling with buyers. Launceston appears to be a current favourite, according to real estate agent Jeremy Wilkinson from Harcourts Launceston - who highlights its accessibility from Sydney and Melbourne, natural beauty, safety and affordability.  

The data bears this out, where houses in the area are the nations top performing - having recorded an increase of +10.5 per cent in the YTD. The region is the top performer for houses for the third consecutive quarter.  Over the recent month units outshone houses growing +3.4 per cent.

Canberra and the ACT

Houses
$753,005
Monthly change: +2.2%
Units
$465,732
Monthly change: +0.6%

Canberra dwellings advanced +1.9 per cent over the month to reach a record high for property values. Prices are up +3.3 per cent over the quarter and a respectable +7.0 per cent for the YTD - for an overall median value of $672,866. 

Houses continue to outperform units, and consumer confidence continues to be high, with minimal impact from the virus.

Adelaide and regional SA

Houses
$498,029
Monthly change: +1.5%
Units
$336,105
Monthly change: +0.4%

Dwelling values are at record highs in Adelaide, and the market here continued to advance +1.3 per cent over November, +3.4 per cent over the quarter for a healthy +9.4 per cent growth for the YTD. 

CoreLogic reports that this growth is being driven by growth in the lower quartile, where values are up +3.6 per cent over the quarter, while upper quartile properties are a touch down on that, up +2.9% over the same timeframe.

Regional SA property prices

Houses
$252,618
Monthly change: +1.3%
Units
$182,667
Monthly change: -2.2%

Overall the regional SA market is steady, though it is highly fragmented from a performance perspective. Regional farming areas and Outback SA continue to experience negative growth, but in-demand regional centres - like the Barossa - continue to see excellent long-term results.

Perth and regional WA

Houses
$482,745
Monthly change: +1.1%
Units
$359,499
Monthly change: +1.0%

Perth continues it’s recovery, after many years in the doldrums, continuing to advance over November +1.1 per cent, +1.9 per cent over the quarter and in the black up +0.8 per cent for the YTD - for a median dwelling value of $463,846.

Regional WA property prices

Houses
$334,198
Monthly change: +0.9%
Units
$210,024
Monthly change: +4.1%

Regional WA is also back in the black, largely thanks to resource-led demand - which the opening of borders and restrictions should give a further shot in the arm. This is reflected in the growth of unit values which advanced a whopping +4.1 per cent over the month.

Darwin and regional NT

Houses
$490,881
Monthly change: +1.6%
Units
$286,475
Monthly change: +2.4%

Darwin continues to have the cheapest residential property prices in the country, but they are advancing quickly - up +1.9 per cent over the month, +4.7 per cent for the quarter and +5.9 per cent for the YTD - for a median value of $405,857.

Rents and rental yields

Rental market conditions continue to remain weak across many inner-city unit markets.

 

According to CoreLogic, rental market conditions are still weak across many inner city unit postcodes. 

Asking rents continue to fall in Sydney, with rents for houses down -0.4 per cent and units -6.6 per cent. The same trend is playing out in Melbourne, though with larger discounts - asking rents for houses down -1.0 per cent, and for units down -7.6 per cent. This is based on CoreLogic data for the period March 31 to November 31.

Property analysts SQM Research confirm this, reporting that rents are down -2.2 per cent across Sydney, with soaring vacancy rates in some areas. The Hills District is the epicentre of this, where 4.9 per cent of all rentals are currently vacant. 

It is a very different story elsewhere, with the Real Estate Institute of Queensland (REIQ) reporting that suburbs on the Gold Coast’s south have some of the country’s lowest vacancies - Burleigh Heads (0.4 per cent), Coolangatta (0.2 per cent), Currumbin (0.6 per cent), Palm Beach (0.1 per cent) and Miami (0.4 per cent).

What is the outlook for the months ahead?

According to CoreLogic’s Head of Research, Tim Lawless, if the current growth trend continues we could, “...see a recovery from the COVID downturn as early as January or February next year.”

Broad economic indicators are looking positive - notwithstanding we are still in the midst of a pandemic. The recession is technically over and GDP did rise +3.3 per cent over the recent quarter, as COVID restrictions ease and state borders reopen.

Interest rates also remain at record lows - which should stimulate activity in the housing market. This week the RBA indicated that the cash rate would remain on hold at its record-low rate of 0.1 per cent - likely for the next few years.

The ABC points out that this could be a good time for sellers stating that, “The stock on the housing market is about 20 per cent lower than where it was this time last year, and 24 per cent below the five-year average.” Low stock levels can translate into higher sale prices when there is plenty of buyer demand, but not enough stock to go around.. 

Industry experts Digital Finance Analytics recently conducted a survey, asking Australians whether they planned to sell or buy in the next six months. The results show that some 1.1m Aussies are planning to sell their homes soon - primarily after reassessing their lifestyle priorities in this pandemic era. 

While market activity and values are on the rise, there are still areas of concern for the broader economy - including an uptick in people defaulting on their mortgage and continued trade tensions with China. 

What does this data mean for you?

Remember that while data can be insightful, you need to take any high level numbers with a grain of salt. It’s really important to do local research if you are looking to buy or sell. While high level indices give a great snapshot of what is happening nationally, in capital city markets and regionally, they don’t give great insight into what is happening at the post code level.

Market conditions will vary from suburb to suburb, and the value of your home is not only impacted by location, but also by property type and price point. While there may have been price drops in your city, there are still markets within cities where performance is above average. 

We need to remember that a city like Sydney, Melbourne or Brisbane is a very big place, filled with a huge cross-section of different markets, as well as markets within markets, so a high-level data point about sliding property values should be dissected with a degree of scrutiny.

For advice around the biggest market indicators that impact price growth, you can download this helpful guide.

 

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