COVID-19: Decline In Australian Housing Market

Experts warn house prices across Australia could fall by 50%.

 

 

A combination of low employment and a negatively-impacted economy are predicted to impact the Australian Housing Market.

 

 

While the predicted drop in house prices will not occur instantaneously, some signs are already showing. 

 

 

According to the Home Value Index data released by CoreLogic:

 

 

  • Many cities are already starting to experience a small fall in their Home Value Index for the month of May.
  • Only Melbourne experienced an overall decrease within the last quarter. 
  • On a national level, the Home Value Index has fallen for the month of May.
  • Compared to last year, the Home Value Index is still better for most cities across Australia.
  • Regional Australia has remained strong despite the capital cities experiencing falls. 

 

 

If we have a look at the month-to-month changes for the combined capital cities: 

 

 

  • Australia’ Housing Market is gradually losing momentum.
  • Australia has experienced the first decrease on a month-to-month basis since last year.
  • If this trend continues, mostly likely Australia will continue to experience further decreases. 

 

 

Despite the current situation, CoreLogic’s head of research, Tim Lawless, reassures that:

“Considering the weak economic conditions associated with the pandemic, a fall of less than half a percent in housing values over the month shows the market has remained resilient to a material correction.”

 

 

 

What will the fall in the Australian Housing Market mean?

 

For now, current home owner will have some protection against negative gearing as most home values across Australia remain higher than last year. 

 

 

With the current house prices now, it is at least 8 times the average income in Australia.

 

 

If house prices do fall, it will bring real estate back to a normal level and make it more affordable. This will definitely be beneficial for future generations, but of course, many will be affected during the fall.

 

 

 

Sources:

7 News: Sydney and Melbourne property prices could fall by 50 per cent as debt bubble set to burst, economist warns

CoreLogic: Housing Values Edge Lower In May, While Transaction Activity Partially Recovers From A Sharp Drop In April

 

 

 

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