Which regions have seen the biggest property price falls since COVID-19 hit?

author-avatar By on June 26, 2020
Which regions have seen the biggest property price falls since COVID-19 hit?

Photo by Daniel Kuberek on Unsplash

New research has revealed where the biggest property price falls have occurred since the onset of COVID-19.

With the economy placed into hibernation as a result of the pandemic, the property market has suffered like so many other sectors. 

According to CoreLogic, the regions which have experienced the greatest decrease in dwelling values in May were Mandurah in Perth, and inner Melbourne and Sydney suburbs.

However, despite reports property prices could drop by as much as 30%, declines have been fairly mild so far.

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Lender
Advertised rate Comparison rate Monthly repayment Rate TypeOffsetRedrawOngoing FeeUpfront FeesLVRLump Sum RepaymentAdditional RepaymentsPre-approval
VariableMore details
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Smart Booster Home Loan Discounted Variable - 2yr (LVR < 80%)

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  • 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%)

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

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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
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  • 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.^
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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 19, 2021. View disclaimer.

Nationally, the CoreLogic May home value index showed the dwelling market declined just 0.4% over the month, and preliminary indicators for June were showing the rate of decline has gathered some momentum through the month.

CoreLogic Head of Research Eliza Owen said the Australian housing market wasn't one market but a collection of many.

" Over the past few months, dwelling market performance has varied by region, in both a cyclical and structural way," Ms Owen said.

"As per historic cycles, the most expensive parts of Sydney and Melbourne seem to be leading the current downswing." 

Over the month of May, dwelling values in the top quartile of the Melbourne market (dwellings worth $959,500 or more) had fallen by 1.3%, compared with a 0.6% decline across the middle of the market, and a 0.3% decline in the lowest-value quartile.

Across Sydney, the same period saw a decline in the highest market segment (where dwellings are worth over $1.35 million) of 0.6%, followed by a 0.4% decline across the middle of the market, and a slight increase in the lowest value segment of 0.1%.

Ms Owen said the more expensive parts of Sydney and Melbourne have higher levels of volatility, and typically the first to see price changes. 

"Research from the RBA asserts that more expensive property can be most reactive and volatile in responses to changes in the cash rate," she said.

"The performance of property markets amid COVID-19 suggest the high end of the market may also be more responsive to negative economic shocks."

crlgicronsub

Perth, Melbourne and Sydney property prices worst hit 

Suburbs in Melbourne's inner city and eastern suburbs saw the largest decline across the metropolitan region, according to CoreLogic.

The last two months have also seen a decline in values in high-end Sydney markets, such as North Sydney, the Inner West and the Northern Beaches. 

Maybe more surprising was the continued decline in the Greater Perth region of Mandurah, which saw the largest slip in values over the last two months.

Ms Owen said Mandurah dwelling values were 38% below their 2006 peak at the end of May this year.

"Payroll data analysis from the ABS suggests that payroll job losses across Mandurah has been 6.0% between mid-march and the end of May," Ms Owen said.

"This is not especially severe when it comes to job loss across Perth regions, nor would Mandurah have been particularly susceptible to a demand shock from a decline in overseas migration.

"However, the decline in dwelling values is off the back of a longer-term downward trend, suggesting demand conditions were already fragile across the region."

Property markets most negatively impacted by COVID-19

Capital city region

Region

Change in value - May

Greater Perth

Mandurah

-2.2%

Greater Melbourne

Melbourne – Inner South

-2.2%

Greater Melbourne

Melbourne- Inner

-1.8%

Greater Melbourne

Melbourne – Inner East

-1.8%

Greater Perth

Perth – South East

-1.2%

Greater Melbourne

Melbourne – Outer East

-1.2%

Greater Brisbane

Ipswich

-0.8%

Greater Sydney

Sydney – North Sydney and Hornsby

-0.7%

Greater Sydney

Sydney – Inner West

-0.7%

Greater Sydney

Sydney – Northern Beaches

-0.7%

Source: CoreLogic.

At a suburb level, the worst hit areas were most prevalent in the high end of Sydney and Melbourne. 

Ms Owen said at this stage, sound analysis of the change in suburb-level dwelling markets was limited to areas where there are relatively high sales observations. 

"It appears that Malvern East, in the Melbourne metropolitan, has been the worst suburb-level performer between the end of March and the end of May across the capital cities, with total dwelling market values down -4.8%," she said.

"Other relatively steep value falls have been seen across the Melbourne suburbs of Glen Iris (-3.8%), Northcote (-3.5%), Port Melbourne (-3.2%), and Brunswick East (-3.1%).

"Across Sydney, the biggest suburb-level falls in dwelling values had occurred across Mosman (-2.5%), Lane Cove North (-2.4%) Manly (-2.3%), Leichhardt (-1.7%) and Wentworth Point (-1.4%)."

Ms Owen said as the downturn progressed, declines would continue in inner-city markets which relied on international migration.

As the economic downturn becomes more prolonged, mild price declines are expected to spread over the next 12 months. 


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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Alex joined Savings.com.au as a finance journalist in 2019. He enjoys covering in-depth economical releases and breaking down how they might affect the everyday punter. He is passionate about providing Australians with the information and tools needed to make them financially stable for their futures.

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