How accurate were Australians' COVID house price predictions?

author-avatar By on July 31, 2020
How accurate were Australians' COVID house price predictions?

Photo by Pawan Kawan on Unsplash

Most Australians predicted property prices would fall in 2020 back in April, but a fair chunk of them were well off the mark, according to new data.

Budget Direct survey conducted in April found the majority thought property prices would fall over the following three to six months. 

Of these, the vast majority anticipated an average fall of 20% or less, while around 13% predicted a fall of more than 20%. 

Roughly 20% of the nearly 1,000 people surveyed figured prices would rise, with 12% forecasting price rises of up to 15% and 8% forecasting rises of more than 15%.

The remaining respondents said there would be no change in property prices. 

How much do you think property prices will rise/fall over the next 3–6 months? - Australia

3-6months

Source: Budget Direct 

These predictions are somewhat in line with the predictions made by other major banks and research institutions. 

The University of Melbourne forecast a 4.4% decline in the June Quarter (end of March to end of June), followed by another 2.3% drop in the September quarter. 

Meanwhile, in May Commbank predicted a coronavirus-led house price drop of up to 30% in a worst-case scenario, while NAB also said in April house prices could drop by a cumulative 30%

ANZ also said prices could drop by up to 13% in Sydney and Melbourne through to mid-2021.

But so far, house prices have remained resilient. 

The CoreLogic Home Value Index for June showed that over the June quarter, national median dwelling values declined by just 0.8%, and despite recent falls, estimates of market activity showed a further improvement from the April low.

Indeed, capital cities like Hobart (1.0%), Adelaide (0.7%), Darwin and Canberra (0.4% and 0.7%) actually recorded quarterly dwelling price increases. 

“Whilst COVID-19 hit us swiftly this year and threw Australian economy and property markets into turmoil, things settled down within the property market quicker than initially thought," PRD Real Estate Chief Economist, Dr Diaswati Mardiasmo said

“The key going forward will be increasing levels of employment, public and private investment and consumer confidence based on the ongoing impact of COVID-19.

"This sets the scene as we walk the tightrope to full economic recovery."

Although there's still the September quarter results to come, it's looking like property prices could remain relatively stable, meaning those who predicted falls by more than 20% by September could be well off the mark. 

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
WIN YOUR HOME LOAN INTEREST FREE

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

  • WIN your home loan interest free and save up to $1.1 million. Refinance by 29 October. T&Cs apply.
  • Refinance Only. Fast online application, refinance in minutes, not weeks.
  • No Nano fees, Free 100% offset sub account. Mobile app. Visa debit card & instant payments.
WIN YOUR HOME LOAN INTEREST FREE

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

  • WIN your home loan interest free and save up to $1.1 million. Refinance by 29 October. T&Cs apply.
  • Refinance Only. Fast online application, refinance in minutes, not weeks.
  • 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.^
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

Rates correct as of September 27, 2021. View disclaimer.

Property price predictions by state, age and gender 

The state-level responses were fairly consistent with the national averages, with most people across all states predicting property price falls by up to 20%. 

In terms of age, the 45-54 age group was the most bearish, as it had the highest portion of people predicting a fall in prices of more than 20%. 

The 35-44 age group had the most respondents expecting falls of up to 20%, while the 18-24 age group was the most likely to expect a property price increase of up to 15% or more than 15%. 

BD18-24

BD55-64

Source: Budget Direct 

Meanwhile, in terms of gender, women seem to be more bearish. 

Just over a third of men and nearly half of women anticipate a drop of up to 20%, while more men expected no change in house prices. 

BDgender

Source: Budget Direct 

9/10 have no intention of buying or selling anytime soon 

Around 85% of respondents said they have no intention of buying or selling property in the three to six months following April 2020. 

Of those who do intend to buy or sell, there are more buyers than sellers. 

Of those respondents who were planning to buy or sell property before COVID-19, nearly 60% intend to go through with their plans, and roughly half of those who have delayed their purchase/sale intend to wait up to 12 months now. 

About a quarter of respondents are unsure if they can afford their mortgage or rent repayments, reflecting the high levels of uncertainty COVID-19 is bringing to the economy. 

[Read: Resuming your home loan repayments after a mortgage holiday]

Do you intend to buy or sell property in the next 3–6 months?

BDbuy-sell

Source: Budget Direct 


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.

Latest Articles

author-avatar
William Jolly joined Savings.com.au as a Financial Journalist in 2018, after spending two years at financial research firm Canstar. In William's articles, you're likely to find complex financial topics and products broken down into everyday language. He is deeply passionate about improving the financial literacy of Australians and providing them with resources on how to save money in their everyday lives.

Be Savings smart.
Subscribe for free money newsletters.

By subscribing you agree to the Savings Privacy Policy