CoreLogic has released its Monthly Housing & Economic Chart Pack, which shows that property sales have collapsed on the back of the COVID-19 shutdown.
According to CoreLogic, settled sales fell by around 40% over the month of April, which dragged annual sales into negative:
CoreLogic’s model suggests that sales have fallen to the lowest level since around 1990:
New listings have collapsed to less than half the levels of the 2016, 2017 and 2018:
Total listings are also down by around one quarter from the same time last year:
The degree to which the collapse in sales volumes translates into dwelling values remains to be seen. However, the risks for values are on the downside given:
- The anticipated massive rise in unemployment alongside falling household disposable incomes;
- Expected heavy declines in net overseas migration, especially into Sydney and Melbourne;
- Rising rental supply and falling rents as thousands of Airbnb’s are returned to the long-term rental market; and
- Tighter mortgage availability as banks become more conservative about people’s employment and income prospects.
A bonafide property “crash” could arrive if Australia experiences widespread business closures, creating mass unemployment and loss of income over an extended period. Such and event would likely generate large numbers of forced sales and failed settlements.
Let’s hope we don’t get there because a full on property crash could create a feedback loop that drives the Australian economy into a deep and prolonged depression.
