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Weak population growth tipped to burden house prices
With COVID-19 restricting immigration currently and potentially in the future, it is likely to create a strong headwind for property prices, an industry expert has warned.
Weak population growth tipped to burden house prices
With COVID-19 restricting immigration currently and potentially in the future, it is likely to create a strong headwind for property prices, an industry expert has warned.
Property group Domain has released residential property price figures for the three months to 31 March 2020, reporting that detached housing values increased nationwide over the period.
However, the rebound is set to be short-lived, with analysts now expecting housing market activity to fall in response to the economic fallout from the COVID-19 crisis.
According to Domain economist Trent Wiltshire, subdued population growth, particularly net over search migration, would add to housing market headwinds.
“Lower immigration means reduced demand for property, which will put downward pressure on prices,” he said.
“Lower population growth will be one of a number of factors that will contribute to property price falls in 2020.
The economist also highlighted that it is not just immigration that is causing prices to fall, with various domestic headwinds likely to impact values.
“Other factors are rising unemployment and concerns about job security, expectations of price falling, larger households due to people wanting to save money, some forced sales, and restrictions on transacting real estate (such as the ban on auctions and open for inspections).”
“Property sales are likely to decline by even more than prices.”
Sydney recorded the sharpest increase over the March quarter (2.6 per cent), followed by Hobart (2.2 per cent), Melbourne (2 per cent), Darwin (1.2 per cent), Brisbane (0.6 per cent) and Canberra (0.3 per cent).
House prices remained stable in Adelaide and Perth, but the capitals recorded unit price gains of 4.2 per cent and 1.6 per cent, respectively.
Unit prices also rose in Sydney (2.7 per cent), were stable in Hobart, and fell in Darwin (8.2 per cent), Canberra (5.2 per cent), Brisbane (4.2 per cent) and Melbourne (0.4 per cent).
The March quarter result was reflective of a broader rebound in the housing market, which commenced in mid-2019 off the back of interest rate reductions and the easing of regulatory restrictions.
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