CoreLogic’s head of research, Eliza Owen, has published new research looking at the impact of lockdowns on Australia’s property market.
Owen finds that while transaction volumes were temporarily hit, there was a strong catch-up period. Moreover, prices were resistant to the lockdowns:
Longer social distancing periods had far lower average auction volumes…
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More properties are withdrawn through lockdowns…
A higher portion of properties [were] sold prior and sold after auction during lockdown.
Circuit-breaker lockdowns saw a higher portion of properties sold ‘at’ auction than longer restrictive periods.
Demand declined during lockdowns, but so did advertised supply
Lockdowns were followed by ‘catch up’ dwelling purchases
In the 2020-21 financial year, CoreLogic estimates there were approximately 582,900 transactions nationally, compared to a decade average annual volume of 455,346. This is the highest annual sales volume observed since February 2004.
Between March and April 2020, sales volumes fell a further – 31.5% across Australia (excluding Victoria), beyond the -13.3% that sales volumes would typically decline over the month of April.
Assuming these months had followed recent average changes in volume, there were 18,000 fewer sales in this period due to COVID-restrictions. As restrictions started to ease, the monthly growth rate of sales from May to December 2020 averaged far higher than typical monthly growth rates in the previous 5 years (figure 8).
Ultimately, the months following lockdowns have not only resulted in a resumption of sales activity, but potentially the additional sales that would have otherwise transacted during lockdown periods…
Since the start of 2021, each month of sales has been extremely elevated on the 5 year average…
Housing market values did not ‘crash’, but institutional responses played a key role
Nationally, values saw a peak-to-trough decline of just -2.1% through 2020, before a recovery trend in October 2020…
Several factors could be attributed to the mild downturn and swift recovery, including:
- Record low mortgage rates;
- An engineered economic downturn that had a swift recovery;
- Low listings volumes; and, perhaps most importantly;
- Enormous levels of government and institutional support
In fact, many of the factors that saw resilience in the housing market can also be tied back to the government and institutional response to the pandemic.
This data suggests that Sydney’s property market should cruise through the current lockdown. Prices should be largely unaffected, with only transaction volumes being temporarily impacted.
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