Sydney and Melbourne house prices feel brunt of coronavirus downturn
By Jennifer Duke and Shane Wright
September 15, 2020 — 12.19pm
Australia's biggest property markets felt the brunt of the downturn from the coronavirus pandemic with Sydney and Melbourne property prices falling more than 2 per cent over the June quarter.
The only capital city to avoid a price fall was Canberra, where property values increased 0.8 per cent over the same period, quarterly data from the Australian Bureau of Statistics released on Tuesday shows.
House prices fell in Sydney and Melbourne in the June quarter. Credit:Melinda Houston
Nationally residential prices saw a 1.8 per cent drop in the June quarter, but still increased 6.2 per cent in the year to June. All capital cities experienced annual increases except for Perth and Darwin, ABS head of prices statistics Andrew Tomadini said.
"The number of residential property transactions fell substantially in the eight capital cities during the June quarter 2020, due to the effects of COVID-19 on the property market," Mr Tomadini said.
In Sydney, house prices fell 2.6 per cent, while apartment prices fell 1.4 per cent. In Melbourne house prices dropped 2.8 per cent compared to a 1 per cent decline in apartment values.
The bureau reported the total value of the nation's housing stock dropped by $98.2 billion to $7.1 trillion during the quarter. It is now back to where it was in the September quarter of 2019.
The mean price of a residence in NSW slipped by almost $20,000 to $871,800 while in Victoria the mean price dropped by $17,500 to $736,800.
The average price of a dwelling in Western Australia dropped to $498,500, its lowest level since the bureau started collating these figures in 2011.
Minutes from the Reserve Bank board's September meeting showed members discussed the events playing out in the national property market.
They noted that while prices had fallen in Sydney and Melbourne, the cumulative fall in the national market had been less severe than the market's correction in 2018.
The rental market, however, was facing tougher headwinds.
"Rental supply had been boosted by short-term and holiday rentals being brought onto the long-term rental market, while demand had been depressed by the reduced flow of new migrants and a decline in the rate of household formation," the minutes showed.
"Rental vacancy rates had risen recently, and members noted that downward pressure on rents was unlikely to dissipate in the near term in either Sydney or Melbourne."
SQM Research data released on Monday found the vacancy rate in Melbourne increased to 3.4 per cent in August, up from 3.1 per cent the month before, with an extra 2145 homes sitting empty during stage four lockdowns in the city.
The Melbourne CBD is now at a record high vacancy rate with one in 10 homes empty, up from 8.8 per cent in July.
Sydney's vacancy rate remains the highest at 3.5 per cent, down 0.1 per cent from July. Sydney CBD has 12.9 per cent of homes vacant compared to a high of 16.2 per cent in May.
Latest monthly data from property research company CoreLogic recorded a fourth consecutive month of national house value falls in August, down 0.4 per cent, with Melbourne values dropping the most at 1.2 per cent. Sydney property prices declined 0.5 per cent over the same period.
An earlier version of this article incorrectly stated that the value of the nation's housing stock had dropped to $7.1 billion during the June quarter. It has been corrected to say it fell to $7.1 trillion.
Sydney house prices
Melbourne house prices
Victoria residential property
NSW residential property
Housing slump
Jennifer Duke is an economics correspondent for The Sydney Morning Herald and The Age, based at Parliament House in Canberra.Connect via Twitter or email.
Shane Wright – Shane is a senior economics correspondent for The Age and The Sydney Morning Herald.Connect via Twitter or email.