The nation's capital city outlook - A time of crisis 2

API spoke to a range of property professionals in each state to gain insight into each major property market and what might lie ahead as once-in-a-century shock grips the global economy. John Lindeman is widely respected as one of Australia's leading property market analysts, authors and commentators, and additionally offers a snapshot view of eac

The nation's capital city outlook - A time of crisis 2
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API spoke to a range of property professionals in each state to gain insight into each major property market and what might lie ahead as once-in-a-century shock grips the global economy. John Lindeman is widely respected as one of Australia's leading property market analysts, authors and commentators, and additionally offers a snapshot view of each market.

The Nation's Capital City Outlook - A Time Of Crisis 1



Over the March quarter, Melbourne had the second highest growth rate at 2.9 per cent. But Melbourne’s inner east, where values were previously rising rapidly, recorded a 0.2 per cent drop over the month. Dwelling values across Melbourne's inner south also edged lower.

The median property price sits at $695,299.

Cate Bakos, President of The Real Estate Buyers Agents Association of Australia (REBAA):

This month has exhibited more change than any month I’ve worked through in my career.

I have been quoted prior as saying that the 2019 Federal Election marked a sharp change, but this 2020 coronavirus pace of change challenges everything.

The shutdown is still playing out on the property market. Stock shortage is a possible threat for buyers but at this stage, we find ourselves in unfamiliar territory while Stage Three lockdowns taint our regular way of doing business.

Sentiment is mixed; some buyers have found themselves caught in an anxious situation with either job losses, job uncertainty, reduced hours or contracts under threat, while others are in advantageous positions with bountiful work, strong job security or optimised profits as a result of the pandemic, such as medical frontline staff.

Not all buyers who can buy have the appetite to do so. Some are anxious about future market conditions. Sentiment is mixed, however, it’s fair to say that those who remember 2019’s post-Federal Election conditions are reconsidering their position when it comes to missing opportunity.

Once demand outstrips supply, we can anticipate price gains. Whenever that will be is undetermined, but it will happen.

Buyers will have the opportunity if the supply outstrips the demand, or if vendors who panic sale are offering properties for sale that are within the buyer’s grasp. In this market the opportunity remains bright for those who move quickly enough and are purchase-ready.

Vendors who fire-sale with a degree of panic are unfortunate because good quality properties that have managed campaigns with experienced and dedicated agents are actually selling for reasonable prices. No properties are breaking the land-speed record in this difficult climate, but we are finding that quality, A-grade properties are selling.

It is true though that any investors who fail to factor in COVID-19 related risks are naïve. From job security to tenant job security, location performance to vacancy rates, and lender policies and conditions, every investor should be considering their own financial buffers, exposure, price volatility of each property, exposure to losses through other asset classes, vulnerability to loss of rent, and ability to ride the storm. This environment certainly offers opportunistic buying conditions, but risk mitigation should remain key.

John Lindeman:

Although Melbourne will experience short term falls in property buyer demand, the longer-term outlook for the property market is solid, as the city’s population will return to its high growth rate when the crisis is over. Most of this growth will be from overseas arrivals, causing rental demand to lift.

After new arrivals have settled and become established, they will buy homes in the new outer suburban areas, where prices are still likely to be affordable. We can expect good price growth to continue in first home buyer markets.


Perth’s median property price fell 3.1 per cent over the year to $445,614, a far cry from the days in the 2000s when it challenged Sydney for the highest median price.

James Nihill, Managing Director of Patrick Leo:

The WA capital was finally seeing signs of recovery in 2020 after a five-year downturn but just like our other capital cities, it’s unlikely Perth will escape the impact of the global virus pandemic.

It was looking as though rental vacancies in Perth would decrease in the coming months, with the rental rates earmarked to increase, however these are now set to stagnate. Market and job uncertainty will likely impact on sales figures and the number of new homes being listed to fall as nervous buyers and vendors hold out.

Perth has recently shown signs of economic improvement, with rising activity in the mining sector, increased infrastructure spending and early signs of accelerated population growth. It is also considered one of the capital city markets with the best long-term prospects, so I’m hopeful Perth will show resilience during this difficult time and get back on track to a strong recovery.

The city has the potential to get through this better than Victoria and New South Wales. It has seen consistent drops over the past five years and managed to turn it around. WA was quick to act during the COVID-19 pandemic, being one of the first states to close its border, and already being the most isolated city in the world, it has a very good chance of getting through this.

John Lindeman:

Although Perth’s overseas migration intake has now stopped, it was already virtually at a standstill before the current crisis. While interstate departures have also ceased, this will change once the situation returns to normal. Any rent or price growth potential for the housing market is diminished by this exodus, which will continue until the economy improves.

No growth or higher rental demand can be expected for inner urban high-density units and first home buyer homes in outer suburbs for some time.


Sydney’s house prices inched a little higher in March, with the Harbour City’s median house price reaching $1.02 million, and the median property price hitting $882,849.

Sydney had the highest growth in the country over the quarter, with values up 3.9 per cent.

James Nihill, Managing Director of Patrick Leo:

Sydney’s auction clearance rate in March was approximately 62 per cent, down from 78.5 per cent in February. The last week of March saw a clearance rate of just 38 per cent.

With public auctions now banned due to COVID-19 restrictions, the coming weeks will be a test of how agents are able to handle auctions in alternative ways.

I expect Sydney will remain our strongest property market, as it has always shown resilience in previous economic downturns. House prices will likely come back a little, but the combination of the various Government stimulus packages and support from the banking sector should see Sydney come out the other side relatively unscathed.

The uncertainty of the COVID-19 crisis has had an immediate impact on market sentiment. But savvy investors are watching on keenly as they know a buyer’s market is emerging and they will be able to snap up some good deals.

Futureproofing will be the focus moving forward, with regions that have a high volume of government worker tenants to remain popular. Similarly, first-time buyers with secure employment are watching and evaluating when to buy.

John Lindeman:

Sydney is the finance and banking powerhouse of Australia and its economy is set to recover quickly once the current crisis is behind us.

The main issue with the Sydney property market will be its unaffordability for first home buyers, and it is likely that housing finance will be harder to obtain in the future, so that many aspiring first home buyers will have to rent longer than they would wish.

In addition, future overseas arrival numbers are likely to rise when the current restrictions are lifted, so rental demand will rise and investors will enjoy higher rental yields from their properties. This means that in the long term, Sydney has the potential to become the cash flow capital of Australia for property investors.

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