Home prices in Australia have fallen, but transaction activity is back on track
Jamie Smyth in Sydney
House prices in Australia fell for the first time a year in May as the coronavirus crisis crippled the economy and pushed an estimated 3m people into government wage support schemes.
Property values in state and territory capitals fell 0.5 percent in May, the first monthly fall since June 2019, according to CoreLogic, a research firm. House prices in the two largest cities, Melbourne and Sydney, recorded a fall of 0.9 and 0.4 per cent respectively, while the national index fell 0.4 per cent.
However, price declines were lower than some analysts had expected and transaction activity rose again at the end of May, as social restrictions were reduced in some states due to Australia̵7;s success in suppressing spread of Covid-19.
CoreLogic said sales activity was growing strong last month with weekly auction clearance rates rising from 30.2 percent in late April to 62.7 percent in the week ending May 24.
“Considering the weak economic conditions associated with pandemics, a fall of less than half a percent in monthly housing values shows the market has remained resilient to a material correction,” said Tim Lawless, Corelogic head of research. “With restrictive policies that gradually increase or relax, the downward trajectory of housing values may be slower than expected.”
Australia’s capital stock prices rose 10 per cent last year due to record-low interest rates and banks’ lending standards. But analysts predict that home prices could fall by 10 percent over the next 12 months as unemployment hits 10 percent by the end of June.
Australian banks have deferred payments on 429,000 loans under a scheme that gives people up to six months of home loan repayment.
The government is launching stimulus measures aimed at supporting the construction industry and the housing market, according to the Australian Financial Review. The newspaper said buyers of newly built homes can offer cash grants of at least A $ 20,000 ($ 13,450) by the government.