The latest data about house prices was published today, with the new figures from SQM Research showing that six of the eight capital cities have recorded some level of growth during the month of June.
Perth is the leader this month, with its house price index rising 1.3% in June, followed by Darwin with 1%, Canberra with 0.9% and Brisbane with 0.8%.
The news media, however, will no doubt focus on the results for the two cities where prices fell in June, namely Sydney and Melbourne – because, as we all know, they’re the only places that truly matter in Australia – and besides, it’s a negative and that’s what media likes to focus on.
In terms of annual changes, house prices remain higher than a year ago in all capital cities except Darwin – led by Sydney which is still up 11.5% despite a small decline in June, and Hobart which is 10.4% up on last year, and then Melbourne which is 10% higher than a year ago, despite the drop in the month of June.
Nationally, house prices are 6.3% higher than a year ago and apartment prices are up 5% compared to 12 months ago.
The overall impact of the SQM figures is that real estate continues to defy the predictions of major falls in property values.
We’ve been in the Covid-19 period for over four months and still no sign of property values falling off that proverbial cliff that the attention-seeking economists like to talk about.
Looking to the broader economy, Australia is forecast to be one of the world’s best performers through the Covid-19 period.
The International Monetary Fund in its latest world outlook has revealed the pandemic will lead to a 4.9% fall in global economic activity in 2020.
Australia — alone among advanced economies — will suffer a milder-than-anticipated GDP contraction of 4.5% per cent this year, down from an April prediction of a 6.7 per cent drop.
The IMPF said that Australia is one of “few exceptions” where March quarter growth wasn’t worse than expected.
This reiterates a recent strong rating of the Australian economy by the OECD.
Meanwhile, Australia is one of just 10 countries to retain its AAA credit rating through the coronavirus-induced global recession, after Moody’s Investors Service affirmed the rating and maintained its stable outlook for government finances.
Moody’s says that Australia’s AAA stable credit rating reflects the economy’s strengths and good governance, including health management, that will support the country’s resilience in response to the coronavirus pandemic.
Moody’s forecasts that the economy will shrink this year, but it says the government’s budget spending and support from the Reserve Bank of Australia will mitigate the severe contraction.
It says of Australia: “The fall in GDP is smaller than in other advanced economies in general, consistent with signs that more normal work and spending behaviours are gradually returning as the epidemic recedes in the country.”
And it says: “In Moody’s assessment, the resilience of the Australian economy supports a return to positive growth next year, without any significant long-lasting impact on growth potential once the crisis passes.”
Returning to events in the property market, millennials are at the forefront of house hunting around the country, as real estate agents across the nation report a surge in first-home buyers looking to take advantage of the high level of government support.
Real estate experts say young professionals and couples are busy looking for opportunities to buy in Melbourne, Sydney, Brisbane and elsewhere, in many cases boosted by the HomeBuilder grant from the Federal Government.
The reports come after CommSec released its Economic Six Pack charts for June, which revealed active first-home buyers reached a decade high level earlier this year.
That momentum has further risen throughout the pandemic and could rise again with the federal government’s First Home Loan Deposit Scheme to re-open in July, with another 10,000 places available.
There were 10,000 places available in January, which opportunistic first-home buyers snapped up in a matter of days – and the second round of government support starts this week.
With so much government support around, at both the federal and state levels, it’s a very good time to be a first-home buyer. And of course the low level of interest rates makes it even better.
The weekly auction figures continue to show a market that turning over steadily, without really surging, which is what I would expect in the current climate.
Last week there were 1,424 homes scheduled for auction and there was a preliminary clearance rate of 65%.
This was the highest number of auctions held in nine weeks, demonstrating an ongoing improvement in seller confidence as auction clearance rates hold reasonably firm under the increasingly higher volumes.
In comparison, the previous week saw 1,251 homes taken to auction returning a preliminary clearance rate of 66%, which later revised down to 60% in the final figures.
This time last year saw 1,295 homes taken to auction across the capital cities and a clearance rate of 63% was recorded.
So the current results are fairly comparable to a year ago, despite the impacts of the current Covid-19 period.
BRISBANE’S residential market is weathering the coronavirus storm fairly well, flying in the face of fears house prices would plummet, according to new research.
The latest Real Estate Institute of Queensland quarterly market monitor reveals the median house price for the Brisbane local government area has risen 1.5% in annual terms, to $690,000, while unit prices have increased 1.2% annually to $420,000.
Twelve suburbs outperformed the overall market, achieving double-digit house-price growth over the 12 month period.
Fig Tree Pocket was a standout — the median house price in this western suburb jumped 36%, followed by Milton at 35%, Windsor with 25% and Seven Hills with a 22% increase.
In terms of median unit prices, Bulimba rose 22%, followed by 17% in Murrarie and 15% in Morningside – and all three of those locations are in the eastern suburbs of Brisbane..
REIQ chief executive Antonia Mercorella says Brisbane is on track to be one of the best-performing property markets in the country over the next few years.
And it’s worth noting that the new figures published by SQM Research today show that Brisbane prices rose 0.8% for houses and 1% for units during June – and in annual terms Brisbane prices are up 4.5% for houses and 2% for units.
And, for the final word today, here’s some news from two major businesses which have been booming during the pandemic, not despite Covid-19 but because of it.
Amazon is plotting a major expansion of its Australian business with plans to build one of the country’s biggest warehouses in Western Sydney and a search is also under way for a giant shed in Melbourne.
The local expansion plans come on the back of surging online sales due to COVID-19.
Amazon’s entry into the Australian market three years ago has been described as “underwhelming”, but the retailer is slowly but surely taking market share with its most recently filed accounts showing an almost doubling of revenues from its Australian business in 2019.
Meanwhile, Atlassian has outlined the design for its new $1 billion-plus headquarters, which reportedly will be the world’s tallest hybrid timber building to date.
The locally based, Nasdaq-listed software company has confirmed plans for its 180-metre, 40-storey Sydney office tower next to Sydney’s Central Station.
It will be the flagship project in a NSW government-backed technology precinct that will eventually link Ultimo with Redfern on the CBD’s southern edge.
It will sit next to the $2.5 billion Central Place Sydney project, a twin tower development by Dexus and Frasers Property Australia.
Atlassian will be the major tenant, with 4000 staff in the tower.
That’s it for now in terms of the positive events in the economy and the real estate market.
And, before I go, a reminder that we published today the new 2020-21 FY edition of our most popular report, the National Top 10 Best Buys report.
As a special offer to mark the end of old FY and the beginning of the new one, we are offering the report at half the normal price.