Property update – June 2020

According to the CoreLogic Home Value Index results for May, Australian dwelling values posted their first month-on-month decline since June last year. The national index was down 0.4% over the month, with five of the eight capital city regions recording a fall in values.

The reduction in values through May comes as transaction activity in the market shows more positive signs.  The CoreLogic estimate of sales activity bounced back by 18.5% in May after a (revised) drop of 33% in April.

CoreLogic head of research, Tim Lawless, said “Considering the weak economic conditions associated with the pandemic, a fall of less than half a percent in housing values over the month shows the market has remained resilient to a material correction.  With restrictive policies being progressively lifted or relaxed, the downwards trajectory of housing values could be milder than first expected.”

Across the state capitals, Melbourne’s housing market has posted the largest falls over the month, down 0.9% in May, following a 0.3% reduction in April.  Values were also down over the month in Perth (-0.6%), Sydney (-0.4%), Brisbane (-0.1%) and Darwin (-1.6%), but rose in Adelaide (+0.4%), Hobart (+0.8%) and Canberra (+0.5%).

Regional markets have been more resilient to value falls, with the combined regional index holding firm through May.

Although housing values are currently slipping or stabilising, recent history implies most home owners have some level of buffer that will help protect against negative equity.  National home values remain 8.3% higher than they were a year ago, with Perth (-2.1%) and Darwin (-2.6%) the only capital cities where values remain lower than at the same time last year.

The high annual capital gain is mostly attributable to the earlier growth trajectory of housing values across Sydney (+14.3%) and Melbourne (+11.7%), with the remaining capitals showing a more sustainable history of price rises.

Source: CoreLogic

This information and any advice in this website is of a general nature only and does not take into account the objectives, financial situation or needs of any particular person. It does not represent legal, property, tax, credit or personal financial advice and should not be relied on as such. You should obtain advice relevant to your circumstances before making decisions in relation to any matters discussed. You should obtain and consider the Product Disclosure Statement for any product discussed before making a decision to acquire that product. The case studies are hypothetical, for illustration purposes only and are not based on actual returns. You should seek specialist advice from a tax professional to confirm the impact of any advice on your overall personal tax position. Taxation information is based on our interpretation of the relevant laws as applied at the date of this communication. Nothing in this website represents an offer or solicitation in relation to property, securities, investments, financial services or credit in any jurisdiction. While every care has been taken in the preparation of this information, it may not remain current after the date of publication and Infocus Advisory and its related bodies corporate make no representation as to its accuracy or completeness.