Australian Housing Market Struggles Despite Signs of Stability

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Three years after the World Health Organization declared COVID-19 a global pandemic, the Australian housing market is showing mixed results. While some metrics are returning to pre-pandemic norms, other aspects of the market have undergone lasting changes, according to a report by CoreLogic.

The report reveals that national housing values are 14.8% higher than in March 2020, and although the market shows signs of stabilizing at this higher level, it may be too soon to call the bottom of the market amid ongoing interest rate hikes. CoreLogic suggests that once interest rate increases pause, the movement in sales volumes and home values may become less extreme [1].

In contrast to these findings, Phil Kearns, CEO of AV Jennings, believes that Australian families are still in a tough spot in the property market. Kearns told Sky News Australia, “It’s far from the reality on the ground, now, enquiry levels are massively down, over 50 per cent down across most of the builders, the sales levels are way down at the moment” [2]. Kearns points out that families are waiting for interest rates to flatten out, seeking certainty around what they can pay [2].

The CoreLogic report also highlights the continued divergence of Australia’s housing market, with Adelaide houses experiencing a 43.7% increase in value since the end of March 2020, compared to Sydney’s equivalent median house value gain of $119,830, and Melbourne’s decline of -$1,009 at the median house value level [1]. Additionally, regional dwelling values remain 30.7% higher compared to the combined capitals at 10.4% higher since the pandemic’s onset [1].

Other notable changes in the housing market include the easing preference for houses over units and the impact of the pandemic on the rental market. The portion of residential purchases that were houses trended lower towards pre-COVID levels, and cumulative growth in rent values since the pandemic is at 23.1%, a sharp contrast to the 2.1% national average throughout the 2010s [1].

As the Australian housing market continues to navigate the post-pandemic landscape, it remains to be seen how the market will adjust to shifting trends and the ongoing challenges faced by Australian families.

References:

[1] CoreLogic. (n.d.). Three years on from the pandemic: is the housing market going ‘back to normal’?. CoreLogic. https://www.corelogic.com.au/news-research/news/2023/three-years-on-from-the-pandemic-is-the-housing-market-going-back-to-normal

[2] Sky News. (n.d.). Australian families are ‘copping it’ in the property market. Sky News Australia. https://www.skynews.com.au/opinion/ross-greenwood/australian-families-are-copping-it-in-the-property-market/video/adfbbd113422180f91b5f93a9b8e1780