Coronavirus fuels April home sales plunge, but prices lift: CoreLogic

Housing sales plunged in April as buyers and sellers waited out the virus, but that didn’t stop a modest price rise in all capitals but two.

Home prices rose in all capitals except Melbourne and Hobart during April.

Housing sales plunged in April as nervous buyers and sellers waited out the coronavirus storm, but that didn’t stop a modest rise in prices in most capital cities, according to property researcher CoreLogic.

Just two of Australia's capital cities – Melbourne and Hobart – recorded a fall in house prices over the month of April according to CoreLogic’s monthly house price index, the first full month of data detailing the impact of coronavirus on the property market.

While the rate of growth more than halved month-on-month, the modest 0.3 per cent rise in prices nationally came at the expense of a 40 per cent drop in settlements compared to March and new listings falling more than a third year-on-year.

Regional Australia out performed the capital cities, up 0.5 per cent compared to 0.2 per cent.

CoreLogic’s head of research, Tim Lawless, said the April figures show the housing market has been “remarkably resilient” to the economic fallout from COVID-19 and the social distancing provisions placed on the sector in late March to prohibit public auctions and open homes.

“The Australian version of this global health and economic crisis is only a month-and-a-half old, and it looks inevitable that there will be some downwards pressure on housing values over the coming months. The magnitude of housing value falls depends on a broad range of factors with most hinging on the timing and extent of social distancing policies being lifted,” Mr Lawless said.

“The good news is that Australia has managed to flatten the spread of the virus more effectively and efficiently than expected and we are already seeing a subtle easing of social distancing policies in some states. An early return of economic activity should support a lift in consumer spirits which in turn should see housing market activity sparking back to life.”

Sydney prices grew 0.4 per cent during April, while Melbourne, which led the market’s early stage recovery mid-last year, fell 0.3 per cent. In the smaller markets, Brisbane price grew 0.3 per cent, Adelaide was up 0.4 per cent and Perth nudged 0.2 per cent higher. Neither Canberra (steady) or Hobart (down 0.2 per cent) grew.

Darwin reported its second consecutive month of strong growth, up 1.7 per cent, albeit from a low base.

Coronavirus restrictions were not the only impact on the selling mechanics of the property market last month, with April also including two public holiday weekends – Easter and ANZAC Day – which acted as a natural handbrake on the marketplace.

It was too early to discern any trends from the April data, Mr Lawless said. Stimulus from governments and the banking sector was likely to see the number of forced sales remain low, while rising unemployment is having more of an impact on sectors which tend to have low rates of home ownership.

“No doubt the coming month will provide more clarity about the direction of housing markets. One of the most important indicators to follow will be measures of consumer sentiment. If consumer spirits start to bounce back to more normal levels, this is when we should start to see housing activity lift from their current low levels,” Mr Lawless said.

Economic fallout from the virus will hit the two largest capital city markets of Sydney and Melbourne hardest, due to both markets reliance on demand from overseas migrants and foreign students, poor housing affordability and low rental yields. Impacts can already be seen in the stark slowdown in price the trajectory of both cities, which had been tracking a monthly average growth rate around 1.7 per cent in the six months to March prior to the outbreak.

Prices are slowing fastest as the top end of the market. The most expensive quarter of the market was experiencing price growth of 6.6 per cent late last year which has now slowed to 2.4 per cent over the three months ending April. The prestige end of the Melbourne marketplace acted as the biggest drag on the monthly numbers, down 0.8 per cent in April.