House prices up, but brace for the tumble

A slowdown in house price growth last month is forecast to worsen as the coronavirus puts the ice on the market.

Real estate agent Adrianna May with a newly sold property in Cronulla, southern Sydney on March 28. Picture: AAP

A slowdown in house price growth last month that delivered the weakest result since mid-last year is forecast to worsen as the coronavirus puts the ice on the market.

The second half of the month saw the trend of strong growth that began in July start to weaken as consumer confidence slumped and social-distancing policies, including a ban on public auctions and open homes, came into effect to slow the spread of COVID-19.

House prices were up 0.7 per cent nationally in March, with all capital cities bar Hobart reporting gains, according to property ­researcher CoreLogic’s monthly house price data.

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Sydney reported the most significant price growth, up 1.1 per cent last month to see median prices for houses reach $1.02m.

One of the weaker cities in March was Melbourne, up 0.4 per cent.

While property has so far ­remained immune from the direct economic fallout of the COVID-19 pandemic, flow-on effects from the record fall of the ASX last month and the sharp rise in unemployment have dented consumer sentiment.

AMP Capital chief economist Shane Oliver said prices would fall, stating a short downturn ­combined with the promised government stimulus and unemployment of less than 10 per cent would see prices fall a minimum of 5 per cent. However, a longer downturn would have a more pronounced impact.

“A long and deep coronavirus-driven downturn in the economy that pushes unemployment well above 10 per cent and sees it ­decline only gradually long after the six monthly wage subsidy and mortgage payment holidays end, combining with a significant ­increase in financial stress for stretched landlords as tenants struggle to pay rents, would point to a deeper property price downturn of 20 per cent or so over the next 12 months.”

Darwin recorded the largest monthly gain of 2 per cent for March, taking the city’s quarterly prices up by 0.6 per cent. Brisbane and Canberra prices were each up 0.6 per cent through March, while Perth (up 0.5 per cent), and Adelaide (up 0.3 per cent) reported modest gains. Hobart dropped 0.2 per cent.

CoreLogic’s head of research, Tim Lawless, flagged a likely fall in the number of home sales and new listings. “From a transactional perspective, we are expecting the number of residential property sales to fall dramatically over the coming months — a consequence of tanking consumer confidence, a rising jobless rate and more cautious lending practices,” he said.