Property poised for rebound

How Australia’s property market has largely withstood COVID-19 and predictions of doom.

Alex Overley, with son Hollis, 6, at their home in Modbury, Adelaide, is hoping to take advantage of the uptick in prices for smaller capital cities. Picture: Roy Van Der Vegt

Australia’s property market has largely withstood the economic pressures of COVID-19 and predictions of doom, with smaller cities poised for a rebound.

Upgrading families, downsizing empty nesters and eager first-home buyers have been taking advantage of the price falls that have primarily hit Sydney and Melbourne over the past seven months.

But these groups could be about to face some stiff competition, with fears of a fiscal cliff in March next year starting to dissipate and record low interest rates likely to encourage investors back into the market.

Price data analysis of each Australian postcode through the pandemic, compiled for The Weekend Australian by researcher CoreLogic, shows the smaller capital cities had relatively shallower downturns compared to Sydney and Melbourne, and have begun to flourish.

The City of Onkaparinga, on the southern fringe of Adelaide, takes in some of the capital’s best beaches and the fertile soils of the McLaren Vale wine region. While three of the postcodes in the area recorded high growth, it was the waterfront suburb of Port Noarlunga South (5167) that saw the nation's biggest upswing, with prices up 8.7 per cent to a median of $400,576.

CoreLogic head of research Tim Lawless said more affordable capitals like Adelaide, Brisbane and Perth, alongside the outskirts of Sydney, had remained firm or moved into positive growth territory through the pandemic.

“Those two cities (Brisbane and Perth) are generally much more affordable and I think they’ll be more attractive for interstate migrants as long as their economies improve. They also don’t have the same sort of exposure to factors like overseas migration as a source of demand,” he said.

“The middle and outer ring (suburbs of Sydney and Melbourne) and the bordering regional areas for detached housing will probably continue to be popular and gain steam thanks to extremely low interest rates and some incentives.”

Adelaide homeowner Alex Overley, 39, hopes to take advantage of the city’s strong position when she goes to auction next weekend. Her suburb of Modbury, northeast of the CBD, has seen a 3.5 per cent increase in value through the pandemic, with median property price in her postcode now $403,236.

“Now that we're living in the COVID-normal, we decided we should have a conversation about whether it’s the right time to sell,” she said.

“I’m pleased we waited the six months just to wait out the period of potential uncertainty.”

Outside of the capital cities, regional areas dominated the list of the top 10 biggest movers in Australia, with Dubbo (up 17 per cent in postcode 2827) and Orange (up 14.9 per cent in 2866) in NSW the country’s strongest markets.

On the other end of the spectrum, Melbourne’s blue-chip suburbs have taken a dive. Six of the nation’s 10 worst-performing postcodes were in Melbourne’s inner city, with falls as high as 11.3 per cent in Port Phillip (postcode 3206). Similar trends were seen in Sydney’s Kensington (down 4.6 per cent), Newtown (down 5.8 per cent) and St Peters (down 5.9 per cent).

Mr Lawless said the change in premium markets was ­because they were historically more ­reactive to change in the economic environment but noted a likely quick rebound as ­desirable ­locations became more affordable.