National house prices rose in October: Core Logic

While the residential market looks to be coming around, analysts warn that stimulus may be obscuring the ­severity of the COVID-19 impact on property.

House prices rose in all major markets except Melbourne during October.

While the residential market looks to be coming around after a six-month coronavirus-induced downturn, analysts warn that stimulus may be obscuring the ­severity of the COVID-19 impact on property.

Housing prices fell 2.1 per cent nationally between April and October, affected largely by a 2.8 per cent decline across the capital ­cities, according to property researcher CoreLogic.

October was the first month to see values rise almost uniformly across all major cities bar Melbourne, up 0.4 per cent across the nation. Regional markets drove the monthly change, up 0.9 per cent, having fallen just 0.2 per cent peak-to-trough since April.

Property prices nationally are only 0.1 per cent lower than six months ago and 3.9 per cent higher than a year ago.

CoreLogic head of research Tim Lawless said the rise was probably not a “dead cat bounce” — a small period of growth post-downturn before another significant fall — given the amount of stimulus available to support ­prices.

“Because of the stimulus of ­extremely low interest rates, the ­potential for credit to become easier to obtain from March and improving confidence, there is enough to outweigh the fiscal cliff and the end of mortgage holidays,” Mr Lawless said.

The smaller cities have continued to surge ahead of the larger markets. Darwin and Adelaide were the strongest performers of October, each up 1.2 per cent. Canberra and Hobart both rose 1 per cent, while Perth and Brisbane were up 0.6 per cent and 0.5 per cent respectively. Sydney property price inched 0.1 per cent higher. Hard-hit Melbourne was the only capital to report a loss, down 0.2 per cent.

AMP chief economist Shane Oliver warned that the earlier than expected rise may spark a new wave of FOMO, or “fear of missing out”, particularly outside of Melbourne and Sydney.

“Reading too much into property market indicators at present is dangerous because the market is still very artificial, being supported by various support measures, and the rebound in the sales activity partly reflects the unleashing of pent-up demand and supply,” Dr Oliver said.

“While the combination of reopening, government incentives, easing lending standards and low rates could push prices higher in the months ahead, the overall outlook into next year remains messy with a high risk that the negatives could reassert themselves particularly in Melbourne and inner-city Sydney.”

The number of new homes being listed on the market surged 25.3 per cent over the past four weeks.

However, total stock levels remain low (up 1 per cent over the same period), which suggests transactions are happening quickly.

CoreLogic estimates a 7 per cent rise in home sales nationally in October despite lower Melbourne activity due to lockdowns.

Mr Lawless said the big wildcard in all these predictions was the virus, warning that another wave of infections could undo the gains.

Mortgage lending figures for September from the Australian Bureau of Statistics show the number of new home loans rose 5.9 per cent to hit the second-highest monthly value of new lending on record. Refinancing was up 15 per cent.

REA Group executive manager of economic research Cameron Kusher said low borrowing costs and reduced ability for discretionary spending, such as overseas holidays, would probably appear in housing.

He said he believed mortgage demand, particularly refinancing, would increase should the Reserve Bank choose to cut interest rates on Tuesday to new lows.