Melbourne regions among hardest hit by COVID-19

Four of the 10 regions most impacted by COVID-19 in terms of house price falls are in Melbourne, but price declines remain fairly mild, according to new research from CoreLogic.

The market analyst today revealed the Australian regions where house prices had fallen the most during the coronavirus crisis, with Melbourne’s Inner South, Inner, Inner East and Outer East all ranking within the 10 most affected areas.

House prices fell by 2.2 per cent from March 31 to May 31 in Melbourne’s Inner South, by 1.8 per cent in Melbourne’s Inner and Inner East and by 1.2 per cent in Melbourne’s South East.

CoreLogic head of research Eliza Owen said declines in values had also been experienced in high end markets in Sydney, including North Sydney, the Inner West and the Northern Beaches.

Mandurah, south of Perth in Western Australia, was ranked as the most affected region, with a change in dwelling values of 2.2 per cent.

Ms Owen said the Mandurah result was surprising, with dwelling values 38 per cent below their cyclical peak at the end of May and Perth’s housing markets moving into a growth phase at the start of the year.

“Payroll data analysis from the ABS suggests that payroll job losses across Mandurah has been 6 per cent between mid-March and the end of May,” Ms Owen said.

“This is not especially severe when it comes to job losses across Perth regions, nor would Mandurah have been particularly susceptible to a demand shock from a decline in overseas migration.

“However, the decline in dwelling values is off the back of a longer-term downward trend, suggesting demand conditions were already fragile across the region.” 

At a suburb level, Melbourne’s Malvern East was the worst performer over the period, with dwelling values down 4.8 per cent.

Other areas where values have declined sharply in Melbourne include Glen Iris (-3.8 per cent), Northcote (-3.5 per cent), Port Melbourne (-3.2 per cent) and Brunswick East (-3.1 per cent).

In Sydney, the biggest suburb level falls were in some of the city’s most expensive markets, with values falling by 2.5 per cent in Mosman, by 2.4 per cent in Lane Cove North, and 2.3 per cent in Manly. 

“As the downturn progresses, we are likely to see continued declines in inner-city markets that had previously relied on international migration for new housing demand,” Ms Owen said.

“However, as the wider economic downturn drags on housing demand, mild price declines are likely to spread, resulting in a more broad-based downturn in the next 12 months.”