COVID-19 pandemic hits harder at property values in ritziest suburbs

Ritzier parts of Melbourne and Sydney are suffering the biggest price falls as COVID-19 deals an uneven blow to property.

A real estate agent welcomes potential buyers to an open house.

Well-to-do areas in Sydney and Melbourne are suffering the largest decline in prices as the coronavirus pandemic hits the property market, according to CoreLogic.

But the property researcher warns of a broader downturn ahead, as the impact of the economic downturn spreads to cheaper areas.

Over the month of May, the value of prestige properties in Melbourne worth $959,500 or more fell by 1.3 per cent, compared with a 0.6 per cent decline across the middle of the market, and a 0.3 per cent decline in the lowest value quartile.

In Sydney, top-value properties worth $1.35 million or higher declined by 0.6 per cent, followed by a 0.4 per cent decline across the middle of the market.

Properties in the lowest quartile of the Sydney market saw a slight increase of 0.1 per cent.

Nationally, property values declined by 0.4 per cent over May.

The relatively larger decline in the price of higher-end properties means average values in well-heeled suburbs are the most affected.

The ritzy suburb of Malvern East in Melbourne was hit the hardest over May, with total dwelling market values down by 4.8 per cent.

Glen Iris declined by 3.8 per cent, Northcote by 3.5 per cent, Port Melbourne by 3.2 per cent and Brunswick East by 3.1 per cent.

In Sydney, the North Shore harbourside suburb of Mosman saw the largest dwelling value decline, at 2.5 per cent.

Lane Cove North was a close runner-up, declining 2.4 per cent, while Manly fell by 2.3 per cent and Leichhardt by 1.7 per cent.

Head of research at CoreLogic Australia, Eliza Owen, said the higher end of the market was often a “first mover” when it came to market declines.

“Research from the RBA asserts that more expensive property can be most reactive and volatile in responses to changes in the cash rate,” she said.

“The performance of property markets amid COVID-19 suggest the high end of the market may also be more responsive to negative economic shocks.”

More affordable localities saw relatively strong monthly growth.

Sydney’s outer west and the Blue Mountains region reported an increase of 0.7 per cent in dwelling values, while Melbourne’s north west grew by 0.2 per cent.

Hobart values grew by 0.7 per cent while Adelaide’s central and west districts, as well as Brisbane’s north, east and west, all had rises of between 1 and 2 per cent.

The best performing area was Sydney’s Ryde, a family-orientated northern suburb, which saw dwelling values increase by 2.2 per cent.

Ms Owen said that as Australia’s first recession in 29 years drags on, property price declines are likely to spread to other sectors of the market.

“As the downturn progresses, we are likely to see continued declines in inner-city markets that had previously relied on international migration for new housing demand,” she said.

“However, as the wider economic downturn drags on housing demand, mild price

declines are likely to spread, resulting in a more broadbased downturn in the next 12 months.”

* Top 10 losses by suburb:

Melbourne - Malvern East - 4.8%

Melbourne - Glen Iris - 3.8%

Melbourne - Northcote - 3.5%

Melbourne - Port Melbourne - 3.2%

Melbourne - Brunswick East - 3.1%

Sydney - Mosman - 2.5%

Sydney - Lane Cove North - 2.4%

Sydney - Manly - 2.3%

Greater Perth - Mandurah - 2.2%

Sydney - Leichhardt - 1.7%

* Top 10 gains by area:

Sydney - Ryde +2.33%

Adelaide - West +2.0%

Brisbane - West + 1.9%

Brisbane - East +1.3%

Brisbane - North +1.1%

Adelaide - Central and Hills +1.1%

Sydney - Eastern Suburbs + 1.1%

Sydney - Outer West and Blue Mountains +0.7%

Hobart - Hobart + 0.7%

ACT - ACT + 0.7%

Source: CoreLogic