In every capital city market, except for the unit market in Perth, prices for houses and units will be greater over the four year period December 2019 to December 2023 covered by the report under Covid-19 than would have otherwise been the case, the data suggested.
LOCKDOWNS DON’T HALT MARKET MOMENTUM
Weekend auction clearance rates indicate the market has not been spooked by Australia’s Covid struggles and new lockdowns, with the national clearance rate at 76 per cent.
“The combined capital city preliminary auction clearance rate improved as volumes remained relatively steady week-on-week., CoreLogic reported.
Even in locked down Sydney market momentum has continued as buyers and sellers adjust their strategies to local health restrictions.
“Both the withdrawal rate and proportion of auctions ‘sold prior’ were well above average across Sydney as vendors pivot their selling strategies amidst the extended lockdown,” CoreLogic reported.
Covid has accelerated rather than stalled price growth. Photo: David SwiftSource:News Corp Australia
As illustrated by Melbourne’s incredible resurgence in growth: lockdowns appear to have only stalled price growth, not prevented it. As such, Sydney’s lockdown is unlikely to affect market momentum.
“CoreLogic has observed short, sharp falls in sales and listings, followed by a swift recovery in transaction activity. There has been little impact observed on prices,” the respected data property firm reported in their recent end of financial year report before Greater Sydney was locked down.
CoreLogic Head of Research for Australia, Eliza Owen said: “The question is not what impact short lockdowns have on the housing market; there seems to be relatively little impact. Instead, outcomes for the housing market and industry will depend upon how long lockdown conditions last across parts of the country, and whether some of the institutional responses offered through 2020 are reinstated if an extended lockdown occurs.”
However KPMG’s study, which included modelling based on dwelling prices, interest rates, investor market share and macroeconomic controls to compare a ‘no-Covid’market to the market that evolved during the pandemic, expects price growth to slow.
Price growth in Sydney will likely continue once lockdown is over. Photo: David SwiftSource:News Corp Australia
“There is an expectation that house price growth will moderate in the next few years as mortgage interest rates start to rise and the impact of lower than anticipated population growth starts to bite,” the KPMG real estate report concludes.
“Notwithstanding this moderating property price growth during 2022 and 2023, KPMG’s analysis shows that house prices are expected to be between 4 percent and 12 percent higher and unit values are expected to be between 0 percent and 13 percent higher than would have been the case in the absence of COVID-19.
“There is an expectation that house price growth will moderate in the next few years as mortgage interest rates start to rise and the impact of lower than anticipated population growth starts to bite.
“During the four years from the start of 2020 to the end of 2023 the stocks of houses and units in Victoria and New South Wales are expected be around 25,000 and 20,000 lower respectively than would have been the case in the absence of the COVID-19 pandemic.