Australian housing values charted their first month-on-month decline since June last year, according to the CoreLogic Home Value Index results for May.
Five of the eight capital city regions recorded a decline, with the national index down 0.4% over the month.
“Considering the weak economic conditions associated with the pandemic, a fall of less than half a percent in housing values over the month shows the market has remained resilient to a material correction,” said CoreLogic head of research Tim Lawless.
“With restrictive policies being progressively lifted or relaxed, the downwards trajectory of housing values could be milder than first expected.”
However, even with some areas faring better than expected and values holding relatively firm, the market has lost momentum and it’s still too early to form a longer-term outlook.
“Eventually government stimulus will wind back and borrower repayment holidays will expire. In the absence of these policies, housing values could come under some additional downwards pressure if economic conditions haven’t picked up towards the end of the year,” Lawless said.
Even with housing values slipping over May, national home values remain 8.3% higher than a year ago, with Darwin (-2.6%) and Perth (-2.1%) the only capital cities where values are lower than the same time last year.
Fortunately, transaction activity in the market has also begun to show more positive signs.
After falling by around one third in April relative to March, the estimate of sales activity has rebounded by 18.5% in May.
“While downside risk remains, the trajectory of the housing market is looking healthier than what we were expecting a bit over a month ago,” Lawless said.
“The virus curve has been flattened more quickly and effectively than even the best case scenario forecasts, meaning some of the most restrictive policy settings have been either lifted or relaxed. Consumer spirits have lifted, vendors are starting to test the market and buyer numbers have risen.
“If history is anything to go by, housing values have generally weathered periods of extreme uncertainty quite well, and the trend to date looks very similar.”