House prices in Australia’s biggest cities could decline early in 2021 due to raised coronavirus restrictions for the latest infections affecting the eastern states.
Tim Lawless, the research director of property data group CoreLogic, said house prices would probably decline in the first couple of months as buyers become wary of the latest COVID-19 restrictions.
“It stands to reason that the latest coronavirus changes will dent consumer confidence and the housing market could be negatively impacted,” he said on Monday.
States and territories from December have prevented travellers, mostly those from NSW, entering following the Sydney virus outbreak which has spawned more than 100 infections.
NSW last week followed Victoria’s lead in mandating masks be worn for indoor settings in most parts of the state.
Mr Lawless said consumer confidence indices usually dipped following heightened measures.
“We can see when consumer sentiment falls, we see a similar fall in transactional activity,” he said.
Buying a property is a high commitment decision and you want to be confident about your household finances, your job, and the ability to get a mortgage.”
Australia’s housing market increased in value in 2020, despite the drag on activity caused by the outbreak of coronavirus.
The national home value index rose three per cent over the year to a median price of $574,872, according to CoreLogic.
Values in regional areas led the way with a 6.9 per cent increase for a combined median of $420,502, compared to two per cent for major capital cities with a combined median of $651,983.
Melbourne was the only capital city to finish the year underwater – albeit on a relatively healthy median price of $682,197 – after battling two waves of outbreaks of COVID-19.
The most expensive city was Sydney, with a median value of $871,749, and the cheapest was Darwin on $416,183.
Mr Lawless said record low borrowing rates supported the market in 2020, along with a “spectacular” rise in consumer confidence.
Confidence was buoyed in the latter months of the year as COVID-related restrictions and border constraints began to be lifted.
“Containing the spread of the virus has been critical to Australia’s economic and housing market resilience,” Mr Lawless said.
CHANGES IN CAPITAL CITY HOME VALUES IN 2020:
* Sydney – 2.7%
* Melbourne – down 1.3%
* Brisbane – 3.6%
* Adelaide – 5.9%
* Perth – 1.9%
* Hobart – 6.1%
* Darwin – 9%
* Canberra – 7.5%