Resi Prices Drop despite ABS Citing Growth14 June 2020
According to figures released today by the Australian Bureau of Statistics residential property prices rose 1.6 per cent in the March quarter 2020, however a closer look at the Median Prices suggests that key cities have in fact fallen significantly.
The ABS reported that all capital cities recorded a rise in residential property prices in the March quarter 2020, with Australia's two largest cities, Sydney up +1.9% and Melbourne up +2.1%. The actual Median data for these cities suggests that the market for Houses has actually declined significantly over the quarter with Sydney down -7.8%, Melbourne down -5.8% and Brisbane down -2.9%.
The Apartment market saw similar falls with Sydney down -2.0%, Melbourne down -3.75%, and Brisbane down -2.8%.
The decline in values comes as a result of a significant drop in activity with far fewer properties sold in the period. Sydney saw a -55% decline in the number of houses sold and a -47% decline in the number of apartments, reducing activity to levels not seen in over 15 years. Melbourne saw a -59% fall in the number of houses sold and a -54% fall in the number of apartments sold. Other cities showed a similar drop on volume.
The reported rise in the ABS index is curious and our attempts to clarify this with the ABS today were unanswered.
Speaking to their own results, ABS Chief Economist Bruce Hockman said, "Estimates are in line with expectations. The majority of restrictions relating to COVID-19 came into effect in late March and therefore did not have a noticeable impact on property prices in the March quarter 2020."
The decline in the March quarter effectively reverses the December quarter jump and is reflects the general sentiment in the market following the devastating bush fires through the December / January period. Impacts from COVID19 were unlikely to show u in the March quarter as the majority of restrictions relating to COVID-19 came into effect in late March and are therefore more likely to show up in the next quarter results.
The fall in values, whilst good for first home buyers, places greater pressure on recent buyers in the market who are potentially facing losses in value at a time when unemployment is likely to increase significantly, bringing further pressure on household mortgage holders.