Where the biggest property price falls have been since the onset of COVID-19

Written on the 3 July 2020

The government response to COVID-19 has placed the property market cycle at the cusp of another decline. So far, property value declines have been fairly mild. Nationally, the May home value index results show that the dwelling market declined just 0.4% over the month, and preliminary indicators for June are showing the rate of decline has gathered some momentum through the month.

However, the Australian housing market is not one market, but a collection of many. Over the past few months, dwelling market performance has varied by region, in both a cyclical and structural way. The most expensive parts of Sydney and Melbourne seem to be leading the current downswing.

Across Sydney over the month of May, the same period saw a decline in the highest market segment (where dwellings are worth over $1.35 million) of 0.6%, followed by a 0.4% decline across the middle of the market, and a slight increase in the lowest value segment of 0.1%.

Across Sydney, the biggest suburb level falls in dwelling values had occurred across Mosman (-2.5%), Lane Cove North (-2.4%) Manly (-2.3%), Leichhardt (-1.7%) and Wentworth Point (-1.4%).

As the downturn progresses, we are likely to see continued declines in inner-city markets that had previously relied on international migration for new housing demand.

However, as the wider economic downturn drags on housing demand, mild price declines are likely to spread, resulting in a more broad-based downturn in the next 12 months.

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