The light at the end of the tunnel glimmers for the Australian property market in the month of October with the national home value index moving back into a positive month-on-month growth of 0.4%. COVID-19 cases tread back to single digit lows across all states; consumer sentiment began to increase and all capital cities, bar Melbourne, experienced positive growth of up to 1.6% over the month; however, Melbourne is likely to join these ranks within the next few months as the lockdown ends.
So let’s take a dive into how each region performed in October:
Sydney
October: Capital Growth, Houses: 0.5%
October: Capital Growth, Units: - 0.5%
October: Capital Growth, All Dwellings: 0.1%
Median Dwelling Price, Houses: $993,927
Median Dwelling Price, Units: $735,350
Gross Rental Yield, Houses: 2.7%
Gross Rental Yield, Units: 3.3%
New South Wales Unemployment Rate (September’20): 7.2%
Property Cycle, Houses: Rising Market
Property Cycle, Units: Declining Market
For the first time in five months, Sydney’s median dwelling (a combination of houses and units) values produced a positive result, with a 0.1% increase in October 2020 to a median value of $860,955; this equates to an annual dwelling value change of 6.1% and a total return of 8.8%. Rental yields in Sydney remained at a low 2.9% with a drop in rent of 1.0% and 5.8% for houses and units respectively from March 31.
Despite the continual struggle of Inner-city apartments, it looks like recovery mode has begun as consumer sentiment and a resurgence of interest in the market have pushed one of Australia’s biggest property markets back into positive growth in the wake of low COVID-19 cases.
Melbourne:
October: Capital Growth, Houses: - 0.3%
October: Capital Growth, Units: 0.1%
October: Capital Growth, All Dwellings: - 0.2%
Median Dwelling Price, Houses: $780,574
Median Dwelling Price, Units: $561,881
Gross Rental Yield, Houses: 2.9%
Gross Rental Yield, Units: 3.8%
Victoria Unemployment Rate (September’20): 6.7%
Property Cycle, Houses: Declining Market
Property Cycle, Units: Declining Market
The Melbourne property market records an easing decline of 0.2% to a median value of $666,240 with the annual change in dwelling values sitting at 0.7% and a total return of 4.1%. Gross rental yields sit at 3.2%, however, similar to Sydney, the overall rental market has experienced drops in rent of 1.1% and 6.8% for houses and units respectively since March 31 mainly as a result of the mass exodus of Inner-city apartments that were once occupied by overseas migrants like foreign students.
As we have mentioned in previous market updates, the easing of lockdowns in Melbourne will likely release pent-up demand for property, much like what we saw in New Zealand a few months prior. With the easing of lockdown restrictions such as private inspections, Melbourne has experienced a surge in property listings and buyer interest. All signs point toward Melbourne experiencing a similar recovery to Australia’s other capital city markets in the coming months.
Brisbane
October: Capital Growth, Houses: 0.6%
October: Capital Growth, Units: -0.1%
October: Capital Growth, All Dwellings: 0.5%
Median Dwelling Price, Houses: $564,531
Median Dwelling Price, Units: $389,583
Gross Rental Yield, Houses: 4.2%
Gross Rental Yield, Units: 5.2%
Queensland Unemployment Rate (September’20): 7.7%
Property Cycle, Houses: Rising Market
Property Cycle, Units: Rising Market
Brisbane’s median dwelling values have risen by 0.5% in October 2020 to a median value of $510,353 and sits at a positive annual change in dwelling value of 3.5% and a total return of 7.5%. Rental yields in Brisbane remain at a healthy 4.4%, with changes in rent of 0.6% and - 1.7% for houses and units respectively since March 31.
Like most capital cities in Australia, Brisbane’s upward trend going into 2020 has subsided, however, the market has held firm when compared to other capital cities like Sydney and Melbourne despite the impacts of COVID-19. Brisbane offers strong long-term growth opportunities and also presents an affordable option to owner-occupiers.
Adelaide
October: Capital Growth, Houses: 1.2%
October: Capital Growth, Units: 0.9%
October: Capital Growth, All Dwellings: 1.2%
Median Dwelling Price, Houses: $493,170
Median Dwelling Price, Units: $334,339
Gross Rental Yield, Houses: 4.2%
Gross Rental Yield, Units: 5.3%
South Australia Unemployment Rate (September’20): 7.1%
Property Cycle, Houses: Rising Market
Property Cycle, Units: Rising Market
Adelaide’s median dwelling values rose by 1.2% to a median value of $455,425 and sits at a positive annual change of 4.4% and a total return of 8.5%. Gross rental yields sit at a stable 4.2% with a 1.1% increase in rents for houses and a 0.1% decrease for units since March 31.
Another stable market in Adelaide stands resilient in the face of COVID-19, with only one decline in dwelling values over the past ten months (June 2020 posted a 0.2% decline). Despite current record highs in dwelling values benefitting investors, property is still considered to be very affordable for owner-occupiers.
Perth
October: Capital Growth, Houses: 0.6%
October: Capital Growth, Units: 0.4%
October: Capital Growth, All Dwellings: 0.6%
Median Dwelling Price, Houses: $475,199
Median Dwelling Price, Units: $355,971
Gross Rental Yield, Houses: 4.3%
Gross Rental Yield, Units: 5.3%
Western Australia Unemployment Rate (September’20): 6.7%
Property Cycle, Houses: Bottom of the market
Property Cycle, Units: Bottom of the market
Perth’s median dwelling values rose by a steady 0.6% to a median value of $456,267. Perth now sits at an annual change in dwelling values of 0%, with a 4.3% total return. On the rental front, gross yields remained at 4.4% with increases in rents of 4.9% for houses and 3.3% for units since March 31.
Strict border closures from Western Australia have proven to be good insulation from the overall downward trend largely caused by COVID-19 as migration into the state was temporarily put on hold back in April 2020; allowing the market to remain fairly resilient. The rental market in Perth also remained extremely tight with increasing rents rates for both houses and units despite the COVID-19 period.
Hobart
October: Capital Growth, Houses: 0.9%
October: Capital Growth, Units: 1.6%
October: Capital Growth, All Dwellings: 1.0%
Median Dwelling Price, Houses: $524,755
Median Dwelling Price, Units: $408,829
Gross Rental Yield, Houses: 4.5%
Gross Rental Yield, Units: 4.7%
Tasmania Unemployment Rate (September ’20): 7.6%
Property Cycle, Houses: Rising Market
Property Cycle, Units: Rising Market
Hobart’s median dwelling values increased by 1.0% to a median value of $498,073. Annual changes sit at a positive 6.5% with a healthy total return of 11.9%. The rental market has not fared as well, with increasing drops in rent of 4.3% for houses and 6.1% for units, the highest falls of any capital city since March 31. However, gross yield sits at 4.7%.
In terms of dwelling values, Hobart was once Australia’s hottest market prior to the COVID-19 period, and has since regressed slightly from a ballistic 5% increase in March 2020. While still returning mostly positive increases in dwelling values over the past 6 months, the Hobart rental market is where the biggest hits have been taken; with nation-topping reductions in rents. Despite this, according to CoreLogic, house rents are still up 27.2% for houses and 30.7% for units over the past five years.
Darwin
October: Capital Growth, Houses: 1.0%
October: Capital Growth, Units: 1.6%
October: Capital Growth, All Dwellings: 1.2%
Median Dwelling Price, Houses: $483,719
Median Dwelling Price, Units: $270,100
Gross Rental Yield, Houses: 5.4%
Gross Rental Yield, Units: 7.0%
Northern Territory Unemployment Rate (September’20): 4.8%
Property Cycle, Houses: Bottom of the market
Property Cycle, Units: Bottom of the market
Darwin’s median dwelling values have recorded an increase of 1.2% to a median value of $398,910. These past few months of dwelling value increases have pushed Darwin’s annual change to 2.8% and a total return of 9.8%. Darwin retains the crown of the nation’s highest gross rental yield at 6.0%, with increases in rent for houses and units of 4.4% and 3.3% respectively since March 31.
Based on stats alone, Darwin’s property market should be one of the better-performing markets in the nation, with previous consecutive nation-topping numbers in dwelling value changes and a current 6.0% gross rental yield; rental conditions are also some of the tightest in the nation. However, when you peel back some of the layers, data reveals that rents in Darwin are 11.4% lower than five years ago, and a lack of infrastructure projects and employment opportunities will likely cause the property market to stagnate from its current progress.
Canberra
October: Capital Growth, Houses: 1.1%
October: Capital Growth, Units: 0.7%
October: Capital Growth, All Dwellings: 1.0%
Median Dwelling Price, Houses: $737,937
Median Dwelling Price, Units: $462,367
Gross Rental Yield, Houses: 4.2%
Gross Rental Yield, Units: 5.5%
Australian Capital Territory Unemployment Rate (September’20): 3.8%
Property Cycle, Houses: Rising Market
Property Cycle, Units: Declining Market
Canberra recorded a healthy 1.0% increase in October 2020 to a median value of $656,739. The annual change in dwelling values sits at a comfortable 6.8%, with a double-digit total return of 11.8%. The rental market in Canberra has also picked up, with increases in rent of 0.5% for houses and a decrease of 1.2% for units and an overall gross rental yield of 4.5%.
The stability of employment and the overall high household income within this market has led to a resilient market, likely the most resilient market in Australia thus far. We would likely consider Canberra to be Australia’s hottest market at this point in time as Canberra is the only capital city that has not recorded a decrease in dwelling values with positive rises over each month of the year so far.
As we approach the end of a turbulent 2020, the effect of several major factors (such as COVID-19 and the economic downturn that followed) shows how incredibly resilient the property market has been when compared to the overall macro environmental impact of COVID-19. Implementation of both monetary and fiscal policy from the Reserve Bank and the Government has seemingly proven to be effective, with many positive indicators pointing to a forthcoming upswing. These positive indicators include the following:
Increased consumer sentiment and buyer interest in the market
Record-low interest rates (recently dropped to 0.1% by the RBA)
A broad range of Government stimulus packages including the homebuilder, Job Keeper/Job-Seeker, Job Maker, Coronavirus Super Access and tax cuts.
A consistently increasing amount of property transaction numbers.
It is also worth mentioning that despite Melbourne being the only market in the October 2020 period to show a decline in dwelling values, there will likely be a positive upswing in dwelling values in the coming months to reflect the lifting of restrictions throughout all of Victoria.
In conclusion, there is no doubt that the Australian property market has been hit by the impact of COVID-19, however, the overall resilience throughout this year has been quite a sight to behold. Despite various media outlets confidently reporting a forecast of complete collapse for the property market at the start of the COVID-19 period, it seems that these doom and gloom ‘predictions’ were purely speculative, with little data or analysis to back them. The economic fallout of the Coronavirus will likely be far-reaching, impacting the economic outlook of Australia for many years to come, however, the impact on the “property market” pillar of the economy has been relatively minimal. While impossible to predict, there are many positive indications that point to the worst of the downturn being behind us and the Coronavirus tunnel approaching the end.
Index results as at October 31, 2020
Source: CoreLogic Hedonic Home Value Index
CoreLogic Home Value Index Tables
Source: CoreLogic Hedonic Home Value Index
Changes in rents, March 31 - October 31
Source: CoreLogic Hedonic Home Value Index
Rolling three month change in rents, houses v units, combined capitals
Source: CoreLogic Hedonic Home Value Index
Sources: CoreLogic Hedonic Home Value Index
Get in touch to find out how we can help you with your property journey.
If you like this post, we’d love it if you could share :)
Disclaimer: All data and information provided on this site are for informational purposes only. Milk Chocolate makes no representations as to accuracy, completeness, currentness, suitability, or validity of any information on this site and will not be liable for any errors, omissions, or delays in this information or any losses, injuries, or damages arising from its display or use. All information is provided on an as-is basis.
