"Property Is Plummeting”
“Storm Clouds Gathering Over House Prices”
“Cracks Appear in Property Market”
In times like we are currently experiencing with COVID-19, it's very important to be careful with the headlines, like those above, and to focus on the fact.
Media has and will always use negative headlines, in preference to positive, to grab our attention. It's a strategy that works and is being heavily used with the current COVID-19 pandemic.
If you are relying on Chanel 7, 9 or 10 for your news, this is your first mistake.
We should be focusing on the data and facts right now; not opinions.
The reasons why there will be minimal and short-term impact of COVID-19 on the Property Market include:
While we aren’t out of the woods yet, social distancing efforts are working. The Australian Health Minister, Greg Hunt, has announced the numbers of recoveries are increasing and it's evident that the curve is flattening (as of 8th April 2020).
Our major banks have been a huge help to their customers. For example, our well-known banks are offering mortgage payment holidays. Banks are working together, in the best interest of their customers.
$320bn worth of monumental Government stimulus; is a massive 16.4% of GDP. This will go a long way to ensuring that the Australian businesses that are impacted by COVID-19, are in a strong position to rebuild and redeploy when shutdown measures start to ease.
Some businesses are thriving at the moment. Many businesses have extended new jobs to individuals who have been stood down from impacted sectors.
The ‘fully impacted’ sectors are a small minority of the Australian economy. Given the current evidence of a flattening curve, many are optimistic about the gradual wind-down of existing shutdown measures, sooner than expected. This is shown in the below table representing the Australian employment impact restrictions .
Is "Property Plummeting"?
I have come across been multiple headlines referring to “property plummeting”, however, in every case I have been sucked in to read – the only thing plummeting is property listings and auctions being withdrawn due to forced shutdowns. These are not property values.
They represent a reduced supply of property available for sale to the market, Economics 1.0.1 tells me that reducing supply, if demand remained the same, would lead to increasing prices.
The reality is though, that sentiment-driven demand will also reduce in these times. Overall there is no evidence whatsoever of ‘plummeting’ property values. Nor do we expect there will be for well-selected suburbs with strong fundamentals.
Every Capital City Besides Hobart Saw Growth in March
CoreLogic has released their index results for March 2020, showing the change in dwelling values for residential property in Australia.
Given the share market (ASX200) began contracting on the 20th of February, and fell 33% for the next month; the results for the property were going to be interesting .
CoreLogic revealed that every capital city and all the regional markets, besides Hobart, recorded growth in house prices during March.
While there will be areas that have property values heavily impacted over the coming months; like those heavily reliant on tourism, hospitality, or areas with a majority investor ownership; the March results illustrate the strength and resilience of our major markets; especially in times of distress.
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Adam Duffy - Partner at Meridian Australia
P: (02) 9939 3249
 BIS Oxford Economics/Haver Analysis