Powered by MOMENTUM MEDIA
subscribe to our newsletter

PIPA brushes off property market ‘panic’

The association has dismissed talks of “impending property doom”, pointing to periods of strong home value growth following past recessions.

The Property Investments Association of Australia (PIPA) has published a new analysis of housing market trends following past recessions to assess the potential impact of the COVID-19 crisis.

The research – which involved an analysis of annual median house price and index data for seven-year periods beginning at the onset of economic downturns from 1973 to the global financial crisis (GFC) – found that capital city dwelling values “increased significantly” in the five years after a recession.   

“In fact, looking back over the past nearly 50 years, house prices were higher five years after a recession or downturn each time,” PIPA chairman Peter Koulizos said.

The PIPA analysis found:

Advertisement
Advertisement
  • In the five years following the 1973-1975 recession, house prices grew by up to 100.7 per cent (Sydney)
  • In the five years following the 1982-1983 recession, house prices grew by up to 67.7 per cent (Melbourne)
  • In the five years following the 1990-1991 recession, house prices grew by up to 47.3 per cent (Darwin)
  • In the five years following the GFC, house prices grew by up to 39.7 per cent (Sydney)

According to Mr Koulizos, such trends undermine suggestions of a looming property market meltdown induced by the COVID-19 crisis.

“[The] research shows that talk of impending property doom has never happened in recent history – and these recessions or downturns lasted multiple years rather than a few months,” he said.

Mr Koulizos said prices would likely fall across Australia’s capital cities once stimulus support has been exhausted but stressed that the downturn would be followed by a strong rebound.

“An interesting point to that is that in 2011, every capital city recorded a fall in its house price index, which was simply when the GFC stimulus money ran out,” he said.

“This could well become a statistical reality this time around, too, but it’s important to recognise that within either one year or two years of that period, the house price index was showing solid growth once more.”

PROMOTED CONTENT


He concluded: “The moral of the story is don’t panic. Property has shown its resilience through economic shocks before and we have no reason to expect it won’t do so again.”

ANZ Research is forecasting a peak-to-trough decline in property prices of 10 per cent, led by sharp declines in Hobart (11.2 per cent), Melbourne (8.5 per cent) and Sydney (8.1 per cent) over the course of 2020 and 2021.   

The research group said it expects growth trends to begin turning positive in the back end of 2021.

[Related: Housing market faces prolonged downturn]

PIPA brushes off property market ‘panic’
Peter Koulizos
mortgagebusiness

If you have ever considered how you could better service your SME clients but lack the knowledge or confidence to do this beyond referring them on, this is a must-attend event for you. Don't miss SME Broker Bootcamp, a jam-packed, free-to-attend, practical workshop. Register today and secure your place at this interactive, flexible, must-attend event.

Charbel Kadib

Charbel Kadib is the news editor on the mortgages titles at Momentum Media.

Before joining the team in 2017, Charbel completed internships with public relations agency Fifty Acres, and the Department of Communications and the Arts.

You can email Charbel on: This email address is being protected from spambots. You need JavaScript enabled to view it.

Latest News

Sales of new detached homes continued to increase for five consecutive months, despite the end of HomeBuilder grants, confirming a strong d...

An economist with Bluestone has responded to predictions that the cash rate will increase in August, calling the notion “nonsensical”. ...

The Real Estate Institute of Australia (REIA) said it’s expecting demand for sustainable homes and living to increase over 2022. ...

Join Australia's most informed brokers

Do you know which lenders are providing brokers and their customers with the best service?

Use this monthly data to make informed decisions about which lenders to use. Simply contribute to the survey and we'll send you the results directly to your inbox - completely free!

When do you expect the cash rate to start increasing?

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.