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How will COVID-19 affect the Australian housing market?

May 6, 2020 10:00 am by Upside

In these truly unprecedented times, many are wondering what effects COVID-19 will have on the Australian housing market.

With social distancing well in place across the country and an abrupt economic slowdown, coronavirus has left current and future homeowners uncertain of what the future holds..

Firstly, it’s important to keep in mind that these are unprecedented times—the type that happen once in a generation. It’s tough to predict what lies ahead, even for the experts. With that being said, we can take a look at the fundamentals of the housing market, as well as historical trends, to better understand what the future may hold.

In this post, we explore how coronavirus is impacting the residential property market in the short and long term, and take a look at the future of housing in Australia.

The current state of the housing market

jeremy-sold-sticker-9 Following the housing slump of 2019, Australia’s housing market appeared to be well on track to bouncing back.

However, the sharp rise in coronavirus cases triggered a sharp economic downturn across the board, which was only exacerbated by social distancing announcements, a slowdown in business activity and falling stocks.

The RBA made a historic reduction of the cash rate to 0.25% in March to stimulate the national economy and lessen the rapidly rising unemployment rate, with a recent announcement that interest rates will remain on hold at this record-low level. Despite this announcement - which would normally see housing market activity rise - there is still a chance that Australia will go into a recession. During these times, like 2008, consumers are more likely to hold on to their money rather than make high-commitment spending decisions.

Although Australia has yet to enter a recession, the housing market is already showing a few signs of slowing down. Corelogic data suggests greater capital city and rest of state regions have seen an average annual decline in total listings of -24.3 percent, and at the 28 days ending 3rd of May, new listings had fallen to levels lower than the lead up to last Christmas. However, the national change in value (based on Core Logic Dwelling Value Index) in April was still positive at 0.3%.

How will coronavirus impact the housing market?

There’s no way around it: in the short term, it’s going to be challenging for the Australian property market. It is hard to predict exactly how the next 12 months will play out for median house values, with economists presenting a variety of scenarios. What we can do is look at some wider economic changes that might occur and how they could impact the property market.

Rising unemployment

Whilst the unemployment rate is currently just below 10%, this is artificially suppressed due to the JobKeeper payments. The Reserve Bank of Australia forecasts a 20% decrease in the number of hours worked which is a much scarier number. Once COVID-19 passes and life returns to normal, we should expect some improvement in unemployment however it is with the expectation that in many industries, not all jobs will return. It can also be assumed that within some industries, closures may be in place for the foreseeable future.

JobKeeper and mortgage freeze not extended

jobkeeper These two initiatives were fantastic ways to put a hold on the impact of the lockdown on households in hopes of giving individuals and businesses a bit of time to return to normal post-COVID. In turn, this creates a bit more general stability right now, a helping factor in house prices remaining resilient. These forms of assistance are temporary, however, and many households may start feeling the pinch if they have not returned to work, or are continuing to receive decreased wages.

Restrictions on real estate activities

ofi nsw Open home inspections and public auctions were banned in the first roll out of social distancing restrictions, prompting the real estate industry to adjust operations to ensure listings and sales can continue, while also protecting agents, buyers, sellers and the wider community.

The housing market however won’t grind to a halt simply due to these activities suspended for the time being. For example, Upside’s agents are now working remotely, video conferencing with buyers and sellers instead of conducting face-to-face meetings, and using digitally approved signing platforms to formalise any paperwork.

At the same time, we are offering alternative solutions for open homes, such as open for inspection by appointment only, virtual property tours and online bidding services.

In further great news for buyers, sellers and everyone involved in real estate in NSW, agents will now be able to hold (kind of) traditional property inspections and on-site auctions from this weekend. This change follows a six-week limited shutdown due to COVID-19 and is likely to give a boost to activity in the market.

If the government continues to introduce actions to minimize the fallout from coronavirus, we could see economic conditions rebound as quickly as the second half of 2020.

The low interest rate setting, along with improving economic conditions, a rise in sentiment, and release of pent-up demand from buyers and sellers, should provide a more meaningful level of stimulus to the housing sector,” according to CoreLogic’s Tim Lawless.

What does this all mean?

Even prior to COVID-19 hitting Australia, the Australian housing debt-to-income ratio was at a record high of 142.1 per cent. Adding financial pressure on top of that could easily force the hand of many home owners around the country. As outlined by CoreLogic the “true test for property values may come once these ‘holiday periods’ end”.

Both changes in unemployment and removing JobKeeper and mortgage freezes will result in some households having to downsize, whilst it limiting the purchasing power of others.

Listing volumes have been at unprecedented low levels over the past 18 months and COVID-19 saw this plummet. Financial pressures on top of those who have delayed selling over the last 18 months will likely see an influx of new listings. Economists are predicting that this increase in listings and lowering in confidence could lead to a decrease in property values. This means that right now could be the most stable housing market we have for some time.

The unexpected upside for buyers

It’s true that we find ourselves in uncharted waters. But although these are uncertain times, it’s reassuring to remember that Australia’s housing market is incredibly resilient.

As CoreLogic shows, housing has held its own fairly well against economic shocks. What’s more, the housing market performs differently to the share market. A decrease in shares doesn’t necessarily indicate a decrease in house prices, and vice versa.

While the market may continue slow down in the coming week and months, there will still be buyers with the confidence and financial wellbeing to stay active in the housing market — particularly with historically low interest rates.

At Upside, we are well prepared to navigate the changes on the horizon. We continue to be here to support you with industry-leading service and the right knowledge to take advantage of the current market situations, while ensuring the health and safety of all Aussies.


Upside is an Australian-owned, full-service real estate agency with local real estate agents, low fixed fees and zero commission. Our standard is other agents’ ‘extras’, delivering vendors a complete agent managed service including a full appraisal, open home management, copywriting, photography, signage and advertising. It's the way real estate should be.

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