Australian house prices surged 3.9% ahead of coronavirus outbreak

author-avatar By on March 17,2020
Australian house prices surged 3.9% ahead of coronavirus outbreak

Photo by Laura Cros on Unsplash

House prices rose by 3.9% across Australia in the December 2019 quarter, but the impacts of coronavirus on the property market are still to come.

Property prices across the country surged ahead of the coronavirus outbreak, according to the Australian Bureau of Statistics (ABS) Residential Property Price Indexes. 

The 3.9% gain was mostly driven by the Sydney and Melbourne markets where prices spiked by 4.7% and 5.2% respectively. 

House prices lifted by 5.2% in Sydney and 5.5% in Melbourne, while unit prices rose by 3.8% and 4.3% in the two cities. 

Thinking about refinancing to a low-rate, variable owner-occupier home loan? The table below displays some of the lowest-rate variable home loans currently on the market for owner occupiers:

Provider
Ad rate
p.a.
Comp rate*
p.a.
Monthly
repayments
 
2.68% 2.74% $1,618 More details

Base criteria of: a $400,000 loan amount, variable, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. If products listed have an LVR <80%, they will be clearly identified in the product name along with the specific LVR. The product and rate must be clearly published on the Product Provider’s web site. Introductory rate products were not considered for selection. Monthly repayments were calculated based on the selected products’ advertised rates, applied to a $400,000 loan with a 30-year loan term. Rates correct as at 18 May 2020. View disclaimer.

Overall, prices rose in all capital cities except Perth and Darwin, and ABS Chief Economist Bruce Hockman said the property market is on the upswing.

"While Australia's two largest cities continued to lead the rise in property prices, the turnaround in the housing market has spread to all other cities except Darwin," Mr Hockman said.

"Results are consistent with other housing market indicators, including new lending commitments to households and sales transactions, which have been rising over several months."

According to the ABS, the total value of Australia's residential dwellings rose by $294.4 billion to $7.2 trillion in the December 2019 quarter - the largest rise since September 2011.

The mean price of residential dwellings in Australia is now $691,000.

How will coronavirus impact house prices?

The ABS figures pre-date the unfolding coronavirus (COVID-19) pandemic, the effects of which are already beginning to be felt in the property market.

CoreLogic's recent auction results for example show signs buyers are beginning to turn away from the market.

While house prices were on the rise as recently as the December 2019 quarter, some say it may not be the case for much longer given the current state of the economy. 

Research Fellow in Real Estate, Centre for Applied Economic Research UNSW Nigel Stapledon said COVID-19 is bad news for house prices.

"The bottom line is it will be negative - prices will go down," he said.

"People, up until now, have been talking about the property market developing a bit of momentum, with the interest cuts we had last year and the easing in credit conditions."

Mr Stapledon said rate cuts and stimulus packages can only do so much.

"The reason the bank is cutting is coronavirus is negatively impacting the economy as a whole – there’s no escaping that fact," he said.

"Yes, the government has released its stimulus package and there may be more fiscal stimulus on the way, but there are limits to what any government can do.

"There will be negative effects on employment. It will be a short, sharp shock to the economy."


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 2019. They are (in descending order): Credit Union Australia, 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 2019) has more than $9 billion in Australian funded loans and advances. These groups are: Resimac, Pepper, Liberty and Firstmac.

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 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.

*The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate.

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author-avatar
Emma joined Savings.com.au as a Finance Journalist in 2019. She is a journalist with more than five years experience across print, broadcast and digital media, with previous stints at Style Magazines, 4ZZZ radio, and as editor of The Real Estate Conversation. She's most passionate about improving the financial literacy of young women and millennials by writing about complex financial topics in a way that's easy for the average Joe (or Jill) to understand. When she's not writing about finance she's watching Greys Anatomy (again).

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