The property research group has reported that the ACT housing market has been the clear “winner” among Australia’s states and territories during the coronavirus pandemic, increasing 1.3 per cent in value between the end of March and the end of July.
This came even as national housing values declined by 1.4 per cent in the same period.
Eliza Owen, head of research Australia at CoreLogic, noted that the cash rate dropped by 25 basis points in March, which traditionally would lead to an uptick in house prices.
She quoted research from the Reserve Bank of Australia (RBA), which found that for every 1 percentage point reduction in the cash rate, property values may increase 8 per cent over the following two years.
However, the COVID-19 crisis had impacted most states, meaning that this trend did not eventuate in any state except for the ACT.
She explained: “While this traditional relationship is being tested by a global pandemic, residents across the ACT may be relatively insulated from some of the effects of the pandemic.
“Part of this may be because recent case numbers have been low or non-existent. As of early August, social distancing restrictions were easing across the territory, and the ACT had gone almost one month without reporting new active cases,” Ms Owen said.
While the ACT property market has been on an upward trajectory since August last year, and has continued to perform well during the pandemic, Ms Owen warned that this market may see a “delayed downturn” as the economic ramifications of Melbourne’s second lockdown spread across the country.
“As a result, prolonged growth in this market will be subject to how quickly Australia can suppress new virus cases and see recovery in the labour market,” she said.
Another trend evident in ACT’s housing market is that there appears to be two tiers of performance between property values and rent values. While property values continued to rise through July, rent values have slumped half a per cent since the onset of the pandemic.
Ms Owen attributed this to better conditions across higher-paid jobs, in which case people are more likely to buy property and have a mortgage.
“Investor demand, while already low relative to Australia-wide participation, may also be impacted by lower rent values,” Ms Owen said.
According to the payroll jobs data by the Australian Bureau of Statistics, between 14 March and 11 July, the volume of payroll jobs increased across financial and insurance services by 0.7 per cent, and electricity, gas, water and waste services by 2.9 per cent.
Those employed in these sectors are more likely to own a home since these sectors have among the highest typical weekly earnings of Australian industry.
Job losses across more vulnerable sectors such as arts and recreation and food and accommodation services were more acute, dropping by 19.2 per cent and 19.8 per cent, respectively.
However, these sectors accounted for only 7.9 per cent of the ACT workforce even before the pandemic.
Moreover, those working in these sectors are more likely to rent, according to Ms Owen.
Gap between houses and units
CoreLogic data has revealed that while house values were at a record high in July 2020 across the ACT, having shot up by 8.5 per cent over the year, unit values were 3.6 per cent below the record high, where the value of the unit market peaked in May 2010.
The median house value was $721,912 at July 2020.
On the other hand, unit values have performed in line with the recent house market upswing, sitting 2.7 per cent higher over the year.
The median unit value across Canberra was $445,135.
A record 4,427 units were completed in the year to March 2020, while as of April, a further 360 units was set to be completed across the region by the end of October, according to CoreLogic settlement risk data estimates.
The volume of units built in the year to March 2020 was 41.8 per cent higher than in the previous year, and 73.8 per cent higher than the decade average of completions.
In contrast, completions of new houses fell 6.7 per cent in the year, and remain relatively unchanged since the start of the series in 1985, according to CoreLogic data.
[Related: Melbourne lockdown pounds auction volumes]