House prices fall again as post-stimulus uncertainty builds
Declines in home values continue to be mild across the country, but uncertainty is building around what the impacts will be once government stimulus is switched off and banks become less-friendly with lending policies.
CoreLogic’s monthly analysis of house prices showed transaction volumes continued to improve but capital city median house prices declined again in June, with the biggest drops occurring in Perth and Melbourne.
CoreLogic said the national index was down 0.7 per cent in June, with the Western Australian and Victorian capitals falling by 1.1 per cent.
Sydney’s median house price was down 0.8 per cent for the month, Brisbane’s nudged down by 0.4 per cent and Adelaide’s median was slightly down by 0.2 per cent.
Median values in Hobart, Canberra and Darwin recorded slight rises over the month.
CoreLogic head of research Tim Lawless said the downwards pressure on home values remained mild.
“A variety of factors have helped to protect home values from more significant declines, including persistently low advertised stock levels and significant government stimulus,” Mr Lawless said.
“Additionally, low interest rates and forbearance policies from lenders have helped keep urgent sales off the market, providing further insulation to housing values.”
While the short-term impacts of the COVID-19 crisis have not been severe, Mr Lawless noted that the long-term outlook was highly uncertain.
“While it is encouraging to see lenders have recently hinted at an extension in their repayment leniency policies, the government stimulus will eventually taper and banks will require borrowers to repay their loans,” he said.
“The longer-term outlook for the housing market is largely dependent on how well the economy is tracking when these support measures are removed.”
Transaction levels are continuing to improve, with a 21.5 per cent surge in April backed up by a 29.5 per cent increase in sales in June.
New listings have also begun to ramp up, but the total number of listings continues to trend lower, indicating buyer demand remains in the market.
In rental markets, CoreLogic said rental rates trended lower in June, with weak conditions prevalent among units and apartments.
Rents for houses are down just 0.2 per cent since March, while units and apartment median rents have fallen by 1.8 per cent over the same period.
Mr Lawless said rental market conditions were fragmented, with weakest conditions reported in inner city apartment markets.
“The past few months have seen rental listings across inner Melbourne and inner Sydney rise by more than 40 per cent,” he said.
“This indicates a surge in available rentals at a time when demand has significantly diminished.
“Foreign students simply haven’t arrived, domestic students are studying from home and overseas migration has temporarily stalled.
“Compounding weak rental demand is the fact that the hardest his industry sectors for job losses and under-employment are those that are typically aligned with renters rather than home owners.”