The Australian property market experiences its fifth consecutive month of decline over the month of September. However, only the major markets of Melbourne and Sydney have weighed down the overall national average. With COVID-19 cases improving across the nation (especially in Melbourne); market sentiment, consumer confidence and new listings are all on the rise as the housing market looks to rebound out of the COVID-19 downturn.
So let’s take a dive into how each region performed in September:
Sydney
September: Capital Growth, Houses: - 0.2%
September: Capital Growth, Units: - 0.5%
September: Capital Growth, All Dwellings: - 0.3%
Median Dwelling Price, Houses: $983,262
Median Dwelling Price, Units: $743,288
Gross Rental Yield, Houses: 2.7%
Gross Rental Yield, Units: 3.4%
New South Wales Unemployment Rate (August’20): 6.7% (7.2% previously)
Property Cycle, Houses: Declining Market
Property Cycle, Units: Declining Market
Sydney’s median dwelling (a combination of houses and units) values fell 0.3% in September 2020 to a median value of $860,182; however, it still sits comfortably at double digits with an annual dwelling value change of 7.7% and a total return of 10.6%. Rental yields in Sydney remained at the record low of 2.9% with a drop in rent of 1.3% and 5.0% for houses and units respectively from March 31.
Despite yet another fall in median dwelling values, the overall property market in Sydney is looking to rebound with consumer sentiment and confidence rapidly increasing as NSW experiences further days of zero COVID-19 cases and an overall drop in unemployment to a rate of 6.7% (down from 7.2% previously). Prior to COVID-19, the 2019 Sydney property market had recorded the quickest rebound in several decades from its downturn and currently sits 7.7% higher than September 2019.
Melbourne:
September: Capital Growth, Houses: - 0.9%
September: Capital Growth, Units: - 0.8%
September: Capital Growth, All Dwellings: - 0.9%
Median Dwelling Price, Houses: $780,836
Median Dwelling Price, Units: $558,952
Gross Rental Yield, Houses: 2.9%
Gross Rental Yield, Units: 3.9%
Victoria Unemployment Rate (August’20): 7.1% (previously 6.8%)
Property Cycle, Houses: Declining Market
Property Cycle, Units: Declining Market
The Melbourne property market records a further decline of 0.9% to a median value of $666,796. The annual change in dwelling values sits at 3.1% and a total return of 9.5%. Gross rental yields have risen by 0.1%, however, the rental market continues to suffer with drops in rent of 1.3% and 5.0% for houses and units respectively since March 31.
Unfortunately, with Melbourne being hit with stage 4 lockdowns during September, the property market has effectively been sidelined until at least the slight easing of restrictions to allow for property inspections. However, as cases of COVID-19 have seen a drastic decrease since these lockdowns, an easing of restrictions will likely see Melbourne rapidly return to its former glory with pent-up demand for property transactions being released.
Brisbane
September: Capital Growth, Houses: 0.4%
September: Capital Growth, Units: 0.7%
September: Capital Growth, All Dwellings: 0.5%
Median Dwelling Price, Houses: $559,646
Median Dwelling Price, Units: $388,505
Gross Rental Yield, Houses: 4.2%
Gross Rental Yield, Units: 5.2%
Queensland Unemployment Rate (August’20): 7.5% (previously 8.8%)
Property Cycle, Houses: Rising Market
Property Cycle, Units: Rising Market
Brisbane’s median dwelling values have risen by 0.5% in September 2020 to a median value of $504,902 and remains positive with an annual change in dwelling value of 3.8% and a total return of 7.8%. Rental yields in Brisbane remain at a healthy 4.4%, with a changes in rent of 0.2% and - 1.6% for houses and units respectively since March 31. Queensland has also relinquished the crown of highest unemployment rate in the nation to South Australia, with a rate of 7.5% (previously 8.8%).
Brisbane is definitely considered as one of Australia’s most stable property markets. Compared to other capital cities like Sydney and Melbourne, the downturn caused by COVID-19 has been relatively minimal, down only 0.9% since the impact on the market began in April (Melbourne dwelling values have dropped 0.9% this past month alone).
Adelaide
September: Capital Growth, Houses: 0.8%
September: Capital Growth, Units: 1.1%
September: Capital Growth, All Dwellings: 0.8%
Median Dwelling Price, Houses: $486,943
Median Dwelling Price, Units: $332,287
Gross Rental Yield, Houses: 4.2%
Gross Rental Yield, Units: 5.3%
South Australia Unemployment Rate (August’20): 7.9% (previously 7.9%)
Property Cycle, Houses: Rising Market
Property Cycle, Units: Rising Market
Adelaide’s median dwelling values rose by 0.8% to a median value of $449,803 and remains a positive annual change of 3.6% and a total return of 7.8%. The unemployment rate in South Australia has remained at 7.9%, which takes the crown of highest unemployment rate in the nation. Gross rental yields sit at a stable 4.4% with a 0.9% increase in rents for houses and a 0.1% decrease for units since March 31.
Adelaide, like Brisbane, remains relatively stable compared to Sydney and Melbourne, with only a 0.1% drop in median dwelling values since the property market began to feel the effects of COVID-19.
Perth
September: Capital Growth, Houses: 0.3%
September: Capital Growth, Units: 0.2%
September: Capital Growth, All Dwellings: 0.2%
Median Dwelling Price, Houses: $463,634
Median Dwelling Price, Units: $348,398
Gross Rental Yield, Houses: 4.3%
Gross Rental Yield, Units: 5.3%
Western Australia Unemployment Rate (August’20): 7.0% (previously 8.3%)
Property Cycle, Houses: Bottom of the market
Property Cycle, Units: Bottom of the market
Perth’s median dwelling values rose by a steady 0.2% to a median value of $445,717. Perth now sits at an annual change in dwelling values of - 1.0%, with a 3.3% total return. Western Australia’s unemployment rate has also dropped by 1.3%, making it lower than Victoria, Queensland and South Australia. On the rental front, gross yields sit at 4.4% with increases in rents for both houses and units at 3.3% and 1.5% respectively since March 31.
The housing market in Perth remains the lowest in the country ($463,634) among capital cities with a continual tightening of rental conditions; overall, rental rates are up 2% since March 2020. There is a definite turnaround of the Perth property market since the early effects of COVID-19 hit the nation.
Hobart
September: Capital Growth, Houses: 0.6%
September: Capital Growth, Units: - 0.2%
June: Capital Growth, All Dwellings: 0.4%
Median Dwelling Price, Houses: $519,092
Median Dwelling Price, Units: $397,993
Gross Rental Yield, Houses: 4.6%
Gross Rental Yield, Units: 4.8%
Tasmania Unemployment Rate (August ’20): 6.3% (previously 6.0%)
Property Cycle, Houses: Rising Market
Property Cycle, Units: Rising Market
Hobart’s median dwelling values increased by 0.4% to a median value of $489,059. Annual changes remain at a positive 6.4% with a healthy total return of 11.8%. The rental market has not fared as well, with drops in rent of 3.9% for houses and 5.6% for units, the highest fall of any capital city since March 31. However, gross yield sits at 4.7%.
With much of Hobart’s economy depending on the tourism sector, it is likely that the longer COVID-19 affects the nation’s overall economy, the greater the losses that Hobart would face.
Darwin
September: Capital Growth, Houses: 5.4%
September: Capital Growth, Units: 6.9%
September: Capital Growth, All Dwellings: 5.9%
Median Dwelling Price, Houses: $485,085
Median Dwelling Price, Units: $272,244
Gross Rental Yield, Houses: 5.4%
Gross Rental Yield, Units: 6.9%
Northern Territory Unemployment Rate (August’20): 4.2% (previously 7.5%)
Property Cycle, Houses: Bottom of the market
Property Cycle, Units: Bottom of the market
Darwin’s median dwelling values have recorded yet another nation-high increase of 1.6% to a median value of $398,885. These past two months of nation-high increases have pushed the annual Darwin dwelling values into the positives at 1.9%. Darwin also takes the crown of the nation’s highest gross rental yield at 5.9%, with increases in rent for houses and units of 3.0% and 1.6% respectively since March 31.
Over the past two months, Darwin has experienced nation topping numbers in both dwelling values and gross rental yield. However, Darwin’s dwellings still remain as the lowest across capital cities at $398,885, with the next lowest capital city being Perth at $445,717.
Canberra
September: Capital Growth, Houses: 0.2%
September: Capital Growth, Units: 1.1%
September: Capital Growth, All Dwellings: 0.4%
Median Dwelling Price, Houses: $723,6234
Median Dwelling Price, Units: $458,498
Gross Rental Yield, Houses: 4.2%
Gross Rental Yield, Units: 5.6%
Australian Capital Territory Unemployment Rate (August’20): 4.2% (previously 4.6%)
Property Cycle, Houses: Rising Market
Property Cycle, Units: Declining Market
Canberra recorded a modest 0.4% increase in median value in September 2020 to a median value of $644,581. The annual change in dwelling values also sits at a comfortable 6.3%, with a healthy double digit total return of 11.3%. The rental market in Canberra has slightly weakened, with drops in rent of 1.0% for houses and 1.5% for units and an overall gross rental yield of 4.5%.
The past month marks the fourth consecutive monthly increase in dwelling values for Canberra (previously +0.5%). The Canberra property market has remained incredibly resilient to the effects of COVID-19, showing consistent growth throughout despite consumer sentiment and confidence taking a hit. Canberra is less likely to feel the economic impacts of COVID-19, as a good majority of the population is employed under the public sector, thereby having greater stability during tough economic times.
As we approach the final quarter of 2020, it seems like the light at the end of the COVID-19 tunnel can now be seen, with most Australian capital cities recording increases in dwelling values, bar our two biggest markets in Sydney and Melbourne. However, the lifting of property-related restrictions in Melbourne (such as property inspections), will likely open the flood-gates to demand that have been built-up since the lockdowns and restrictions began.
The possible light at the end of the Australian property market COVID tunnel will hinge on a few upcoming measures:
First, the overall containment of COVID-19 and the relaxing of restrictions as a result of that, especially in markets like Melbourne
An easing of lending restrictions set out by APRA to increase the pool of prospective buyers
The prospect of yet another lowering of interest rates later this year to a further record low of 0.25%.
The federal budget announced by Josh Frydenburg on October 6th which details the following important developments:
Increasing the first home loan deposit scheme to support an additional 10,000 applications over the 2020 - 2021 financial year
Tax relief in the form of tax cuts over the next 12 months, which would improve the serviceability of the loan applications
Job-related stimulus packages like the jobmaker, which should look to increase employment activity in the housing market
Only time will tell how the property market will react, but it is looking more and more likely that the COVID-19 slump has begun to stabilize and the market looking likely to return to pre-COVID highs. Westpac economics forecasts that the market will look to rebound by 15% from mid next year once the economy begins to stabilize as the various measures mentioned above begin to take effect.
Index results as at September 30, 2020
Source: CoreLogic Hedonic Home Value Index
CoreLogic Home Value Index Tables
Source: CoreLogic Hedonic Home Value Index
Changes in rents, March 31 - September 30
Source: CoreLogic Hedonic Home Value Index
Gross Rental Yields, September 2020
Source: CoreLogic Hedonic Home Value Index
Sources: CoreLogic Hedonic Home Value Index | Michael Yardney’s Property Update |
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