NSW house prices lift, Victoria declines 5pc: PEXA
A recent report from electronic settlements platform PEXA found that from January to September 2020, the overall median settlement price fell 14 per cent in Victoria and 9 per cent in New South Wales.
Although PEXA’s Property and Mortgage Insights report shows a slight lift in NSW property values in the September quarter, while Victoria declined almost 5 per cent for the period.
“Consumers expect a further decline in housing market activity, likely based on a fall in GDP, wage growth stagnation and a consequent reduction in discretionary spending, slowing population growth linked to migration and limited avenues for further monetary policy responses given record low-interest rates,” the report said.
“An additional dip in economic conditions following the easing of fiscal stimuli would likely result in house prices and housing activity declining further in the medium term.
“Even after recovery in the key drivers of housing activity, there is likely to be a lag before we see the effects in property values and sales.”
PEXA found that there were 7000 fewer listings in the first nine months of 2020, compared to the averages of 2017, 2018 and 2019.
Looking ahead PEXA predicts that GDP and household income are expected to remain weak over the next few quarters, indicating a downside risk for Australia’s housing market activities in the short-to-medium term.
While border closures will reduce net migration and housing demand, PEXA notes that a fall in overseas student numbers will likely reduce demand for rental properties, especially around universities and in capital cities.
“As a large proportion of migration comes from students who remain in Australia after finishing their studies, the effect on the overall housing market could be quite long-lived.”
Close to zero interest rates are likely to remain for the medium term, which the report says would help “dampen the magnitude” of any decline in housing market activity.
The Reserve Bank of Australia is expected to consider a cash rate cut in its November meeting, a move that could see the official cash rate slashed from its already historic low of 0.25 per cent.
Australian housing affordability