Housing values decline for the fourth straight month

author-avatar By on September 01, 2020
Housing values decline for the fourth straight month

Photo by Kon Karampelas on Unsplash

House prices in Australia declined 0.4% in August - the fourth straight month of falls - with Melbourne the 'main drag'.

While CoreLogic's home value index fell for the fourth straight month, the rate of decline slowed, and five of the eight capital cities recorded steady or rising values through August.

Over the month, values were down 0.5% in Sydney, down 0.1% in Brisbane, and down 1.2% in Melbourne.

Adelaide and Perth were flat, while values increased in Hobart (+0.1%), Darwin (+1.0%), and Canberra (+0.5%).

Over the past 12 months, however, prices are still up in all capital cities, except Perth where values have declined 2.0%, while Darwin was flat.

Buying a home or looking to refinance? The table below features home loans with some of the lowest variable interest rates on the market for owner occupiers.

Lender
Advertised rate Comparison rate Monthly repayment Rate TypeOffsetRedrawOngoing FeeUpfront FeesLVRLump Sum RepaymentAdditional RepaymentsPre-approval
VariableMore details
LIMITED TIME OFFER

Smart Booster Home Loan Discounted Variable - 2yr (LVR < 80%)

  • Fast turnaround times, can meet 30-day settlement
  • For purchase and refinance, min 20% deposit
  • No ongoing or monthly fees, add offset for 0.10%
LIMITED TIME OFFER

Smart Booster Home Loan Discounted Variable - 2yr (LVR < 80%)

  • Fast turnaround times, can meet 30-day settlement
  • For purchase and refinance, min 20% deposit
  • No ongoing or monthly fees, add offset for 0.10%
VariableMore details
100% FULL OFFSET ACCOUNTNO APPLICATION FEE OR ONGOING FEES

Low Rate Home Loan - Prime (Principal and Interest) (Owner Occupied) (LVR < 60%)

  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services
100% FULL OFFSET ACCOUNTNO APPLICATION FEE OR ONGOING FEES

Low Rate Home Loan - Prime (Principal and Interest) (Owner Occupied) (LVR < 60%)

  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services
VariableMore details
REFINANCE IN MINUTES, NOT WEEKS

Nano Home Loans Variable Owner Occupied, Principal and Interest (Refinance Only)

  • Refinance only. Fast online application
  • No Nano fees. Free 100% offset sub account
  • Mobile app, Visa debit card & instant payments
REFINANCE IN MINUTES, NOT WEEKS

Nano Home Loans Variable Owner Occupied, Principal and Interest (Refinance Only)

  • Refinance only. Fast online application
  • No Nano fees. Free 100% offset sub account
  • Mobile app, Visa debit card & instant payments
VariableMore details
YOU COULD WIN $100k TO PAY DOWN YOUR LOAN*

Owner Occupier Accelerates - Celebrate (LVR < 60%) (Principal and Interest)

  • For a chance to win $100K towards your home loan, apply with Athena before Oct 31 & be approved by Dec 15
  • We lower your rate based off how much you’ve paid down your loan
  • Automatic rate match
YOU COULD WIN $100k TO PAY DOWN YOUR LOAN*

Owner Occupier Accelerates - Celebrate (LVR < 60%) (Principal and Interest)

  • For a chance to win $100K towards your home loan, apply with Athena before Oct 31 & be approved by Dec 15
  • We lower your rate based off how much you’ve paid down your loan
  • Automatic rate match
VariableMore details
AN EASY ONLINE APPLICATION

Yard Home Loan (Principal and Interest) (Special) (LVR < 70%)

  • Unlimited additional repayments
  • Unlimited free redraws
  • Optional 100% offset can be added for $120 p.a.^
AN EASY ONLINE APPLICATION

Yard Home Loan (Principal and Interest) (Special) (LVR < 70%)

  • Unlimited additional repayments
  • Unlimited free redraws
  • Optional 100% offset can be added for $120 p.a.^

Rates correct as of October 17, 2021. View disclaimer.

CoreLogic's head of research Tim Lawless said Melbourne was the "main drag" on the headline results.

"Through the COVID period to date, Melbourne home values have fallen by 4.6%," he said.

“The performance of housing markets are intrinsically linked with the extent of social distancing policies and border closures which also have a direct effect on labour market conditions and sentiment.

"It’s not surprising to see Melbourne as the weakest housing market considering the extent of the virus outbreak, and subsequent restrictions, which have weakened the economic performance of Victoria."

homevals

Source: CoreLogic

Changing to 'scrambled' cityscapes, regions boom

While home values in the capital cities during the COVID-19 period have been mixed, property analyst group Propertyology said the pandemic will change the way we think about how we live.

Propertyology head of research Simon Pressley said Australian capital cities will move from a "fried egg" model, with a dense downtown core and sprawling suburbia, to a more evenly-balanced "scrambled egg" model.

“People will disburse in a different pattern. A germ does not diminish Australia’s total demand for shelter, but it will significantly influence where people choose to take shelter,” he said.

“More manageable mortgages, low density locations that are less susceptible to future lockdowns, a regional relocation, and working from home will be driving forces.”

Mr Pressley also said the pandemic is the final 'nail in the coffin' for inner-city apartments.

“This asset class was increasingly problematic pre-Covid. And now the future is uncertain for workers in hotels, restaurants and hospitality that normally service international visitors," he said.

"Ditto, the airline industry and international students. Many of this demographic are part of the yolk of the egg, renting an inner-city apartment.”

Mr Pressley also said there could be a "capital city exodus" of more than 100,000 people in the next three years.

"In locations all over Australia, our buyer’s agents have already observed first-hand proof of the regional shift," he said.

CoreLogic's home value index noted performance was mixed in the regions.

Regional NSW was up 0.4% on the month, however other areas were down, such as regional NT (-2.3%), and regional WA (-1.4%). 

Notably, in the past 12 months, regional Tasmania's values are up 9.8%, level with Sydney's performance, with most other regions also up on the year.

Mr Lawless said regional areas are more immune to home value triggers such as migration.

"Unlike their capital city counterparts, which usually receive 85% of net overseas migration, most regional markets have avoided the drop in demand caused by the pause in migration," he said.

"Regional markets may also be appealing for their relatively low density and lower price points. The normalisation of remote work through the pandemic could make proximity to major cities less of a factor in home purchasing decisions.”

Mr Pressley also said the pandemic provided a taste of working from home and a short commute, with 5% of the workforce working from home 'the new normal'.

“After settling into a new groove, we [Propertyology] then realised each of us had ‘manufactured’ an extra 12-hours in our week through not having to commute to and from the office each day," he said.

"That does wonders for productivity and work-life-balance. Consequently, we have made this a permanent thing.”


Disclaimers

The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered which includes retail products from at least the big four banks, the top 10 customer-owned institutions and Australia’s larger non-banks:

  • The big four banks are: ANZ, CBA, NAB and Westpac
  • The top 10 customer-owned Institutions are the ten largest mutual banks, credit unions and building societies in Australia, ranked by assets under management in November 2020. They are (in descending order): Great Southern Bank, Newcastle Permanent, Heritage Bank, Peoples’ Choice Credit Union, Teachers Mutual Bank, Greater Bank, IMB Bank, Beyond Bank, Bank Australia and P&N Bank.
  • The larger non-bank lenders are those who (in 2020) has more than $9 billion in Australian funded loans and advances. These groups are: Resimac, Pepper, Liberty and Firstmac.
  • If you click on a product link and you are referred to a Product or Service Provider’s web page, it is highly likely that a commercial relationship exists between that Product or Service Provider and Savings.com.au

Some providers' products may not be available in all states. To be considered, the product and rate must be clearly published on the product provider's web site.

In the interests of full disclosure, Savings.com.au, Performance Drive and Loans.com.au are part of the Firstmac Group. To read about how Savings.com.au manages potential conflicts of interest, along with how we get paid, please click through onto the web site links.

*Comparison rate is based on a loan of $150,000 over a term of 25 years. Please note the comparison rate only applies to the examples given. Different loan amounts and terms will result in different comparison rates. Costs such as redraw fees and costs savings, such as fee waivers, are not included in the comparison rate but may influence the cost of the loan.

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Harrison is Savings.com.au's Assistant Editor. Prior to joining Savings in January 2020, he worked for some of Australia's largest comparison sites and media organisations. With a keen interest in the economy, housing policy, and personal finance, Harrison is passionate about breaking down complex financial topics for the everyday consumer.

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