Coronavirus housing market proving resilient but patchy

The housing market has been more resilient throughout the pandemic lockdowns of this year, compared with 2020, but not all pockets remain robust.

Clearance rates since the start of the June lockdown declined significantly in the regions of Sydney described by the state government ‘as local government areas of concern’. Above, part of western Sydney. Picture: NCA NewsWire / Gaye Gerard

The housing market has been more resilient throughout the pandemic lockdowns of this year, compared with 2020, but not all pockets remain robust.

In NSW, clearance rates since the start of the June lockdown declined significantly on the Central Coast as well as in the regions of Sydney described by the state government “as local government areas of concern”.

These areas include southwest Sydney, Parramatta and the outer west as well as the Blue Mountains where some parts of Penrith are in strict lockdown.

In Parramatta, average clearance rates prior to the June lockdown were 74.3 per cent but since June have dropped to 64.4 per cent.

On the Central Coast, average clearance rates prior to the June lockdown were a healthy 80.5 per cent but have since slumped to 66.5 per cent.

Even the Northern Beaches, whose residents have not been subject to the same strict lockdowns elsewhere in Sydney, have since June experienced a drop from 90 per cent auction clearance rate to 82 per cent at present, according to the CoreLogic research.

All up, the government-enforced lockdown restrictions of April 2020 produced a 34 per cent drop in sales nationally with a fall of 36.7 per cent in Sydney and more than 40 per cent across Melbourne.

The 2020 fall in sales was due to transactions being harder to carry out amid restrictions, low levels of consumer confidence and employment levels falling by about 600,000 jobs, says CoreLogic head of research Eliza Owen.

This time around, however, household savings are accumulating, the cash rate is at a record low 0.1 per cent and the average cost of debt continues to decline.

“Sydney lockdowns have also seen a much milder decline in employment levels, with the number of people employed falling 0.9 per cent across NSW over July 2021, as opposed to a 5.9 per cent fall in April 2020,” according to CoreLogic.

Sydney auction clearances averaged 76 per cent until late August with the volume of properties cleared averaging 474 a week, which is the highest average weekly auction sales rate for the period since 2015.

Melbourne has fared worse since the beginning of the city’s sixth lockdown with final auction clearance rates averaging 59.4 per cent.

The fall in newly advertised stock has also been milder this year.

For the week ending August 29, there were around 1350 new properties added to the market across Sydney, which is about 23 per cent lower than the five-year average prior to Covid-19.

Assuming new listing volumes will continue to climb, this marks a peak-to-trough decline of 37.5 per cent of new listings added to the market compared to a peak-to-trough decline of 52.4 per cent in early 2020.