According to CoreLogic’s latest Hedonic Home Value Index, national home values slipped by a further 0.6 per cent in July, following cumulative declines of 1.1 per cent in May and June.
Combined capital city values dropped 0.8 per cent, while combined regional values were stable.
Melbourne recorded the sharpest decline in prices over the month of July (1.2 per cent), followed by Sydney (0.9 per cent), Perth (0.6 per cent), Brisbane (0.4 per cent), Darwin (0.3 per cent) and Hobart (0.2 per cent).
Canberra (0.6 per cent) and Adelaide (0.1 per cent) were the only capital cities to record monthly growth.
Reflecting on the figures, CoreLogic’s head of research, Tim Lawless, said the impact of the COVID-19 crisis on the housing market has been “orderly to date”, with record-low interest rates, government incentives and loan relief programs helping to “insulate” the market.
“Advertised supply levels have remained tight, with the total number of properties for sale falling a further 4.3 per cent in the four weeks to July 27, sitting 15.2 per cent below where they were this time last year,” he said.
“Additionally, increased demand driven by housing-specific incentives from both federal and state governments, especially for first home buyers, have become more substantial.”
But Mr Lawless warned that the expiry of loan relief packages and government incentives could spur an increase in “urgent sales” and “test the market’s resilience”.
The CoreLogic analyst added that new lockdown measures in Victoria and tighter social distancing restrictions in NSW could “push consumer sentiment down” and weigh on sales activity.
“Further virus outbreaks present a clear and present danger to the depth and length of the recession, and the performance of the housing market,” he concluded.
AMP Capital senior economist Shane Oliver recently revised his forecasts for price declines in Melbourne in lieu of the new wave of lockdown restrictions.
Mr Oliver now expects home values to fall by as much as 12-13 per cent in Melbourne, with a similar scenario likely for Sydney if a second lockdown is imposed.
According to the AMP economist, it will be years before home values in Sydney and Melbourne return to their 2017 peaks, given the impact of subdued population growth on housing demand.
“Historically in Australia, over the last decade, it’s been the lack of supply relative to high levels of immigration and population growth which has kept prices elevated and in a broad upward trend,” he noted.
Mr Oliver explained that efforts to contain the spread of COVID-19 and high levels of domestic unemployment make it “politically difficult” to return immigration volumes to pre-pandemic levels.
“On balance, I suspect we may not see prices get back to previous highs until around the middle of the decade,” he said.
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.