housing market trends...2020/05/21 · quarterly growth rates suggest that some housing markets had...

Housing market trendsOur Insights. Your Story.

May 2020

Quarterly growth rates suggest that some housing markets had softer growth rates well before COVID-19.

However, it is clear that COVID-19 has placed Australian housing markets at the cusp of another downturn.

318 July 2019© CoreLogic, Inc. All Rights Reserved.© 2020 CoreLogic, Inc. All Rights Reserved.

The quarterly trend in value growth shows the market moved through ‘peak’ growth late last year

Source: CoreLogic

Quarterly change in dwelling values

© 2020 CoreLogic, Inc. All Rights Reserved.

-6%

-4%

-2%

0%

2%

4%

6%

8%

Apr 15 Apr 16 Apr 17 Apr 18 Apr 19 Apr 20

Sydney Melbourne Brisbane Adelaide Perth

-6%

-4%

-2%

0%

2%

4%

6%

8%


Hobart Darwin Canberra

Previous economic shocks have seen housing values relatively insulated, while volumes are more susceptible to volatility.


Housing values have generally been insulated from financial shocks historically but have been more reactive to credit tightening events

Source: CoreLogic© 2020 CoreLogic, Inc. All Rights Reserved.

Housing indices across previous shocks (5yrs either side of event)

Housing sales volume across previous shocks (5yrs either side of event)

40

60

80

100

120

140

160

Oct 82 Oct 87 Oct 92

Black Monday stock market crash (Oct 87)

40

60

80

100

120

140

160

180

Dec 92 Dec 97 Dec 02

Asian financial crisis(Dec 97)

40

60

80

100

120

140

160

Sep 96 Sep 01 Sep 06

Tech wreck / Sep 11

40

50

60

70

80

90

100

110

120

Jan 03 Jan 08 Jan 13

GFC(Jan 08)

60

70

80

90

100

110

120

130


Macroprudential, (Dec 14 / Mar 17)

50000

100000

150000

200000

250000

Oct 82 Oct 87 Oct 92

Black Monday stock market crash (Oct 87)

250,000

300,000

350,000

400,000

450,000

Sep 96 Sep 01 Sep 06

Tech wreck / Sep 11(Sep 01)

140,000

150,000

160,000

170,000

180,000

190,000

200,000

Jan 03 Jan 08 Jan 13

GFC(Jan 08)

200,000

250,000

300,000

350,000

400,000


Macroprudential(Dec 14 / Mar 17)

Housing values and volumes are based on combined capitals region

200,000

250,000

300,000

350,000

400,000

450,000


Asian financial crisis(Dec 97)

618 July 2019© CoreLogic, Inc. All Rights Reserved.

The same is true of the COVID-19 downturn.

The combined capital cities market has seen less than half a percent in value declines over the past month.


Rolling 28-day growth rate in combined capital city dwelling market

-0.3%

-0.4%

-0.2%

0.0%

0.2%

0.4%

0.6%

0.8%

1.0%

1.2%

1.4%

27/0

1/20

20

3/02

/202

0

10/0

2/20

20

17/0

2/20

20

24/0

2/20

20

2/03

/202

0

9/03

/202

0

16/0

3/20

20

23/0

3/20

20

30/0

3/20

20

6/04

/202

0

13/0

4/20

20

20/0

4/20

20

27/0

4/20

20

4/05

/202

0

11/0

5/20

20

18/0

5/20

20


Melbourne and Sydney have shown the sharpest slowdown in housing values, however the level of decline remains mild to date.


Daily CoreLogic home value index – rolling 28-day change

-0.04%

-1.0%

-0.5%

0.0%

0.5%

1.0%

1.5%

2.0%

27/0

1/2

020

24/0

2/2

020

23/0

3/2

020

20/0

4/2

020

18/0

5/2

020

Sydney

-0.76%-1.0%

-0.5%

0.0%

0.5%

1.0%

1.5%

2.0%

27/0

1/2

020

24/0

2/2

020

23/0

3/2

020

20/0

4/2

020

18/0

5/2

020

Melbourne

-0.19%

-1.0%

-0.5%

0.0%

0.5%

1.0%

1.5%

2.0%

27

/01

/20

20

24

/02

/20

20

23

/03

/20

20

20

/04

/20

20

18

/05

/20

20

Combined capitals

0.06%

-1.0%

-0.5%

0.0%

0.5%

1.0%

1.5%

2.0%

27/0

1/2

020

24/0

2/2

020

23/0

3/2

020

20/0

4/2

020

18/0

5/2

020

Brisbane

0.41%

-1.0%

-0.5%

0.0%

0.5%

1.0%

1.5%

2.0%

27/0

1/2

020

24/0

2/2

020

23/0

3/2

020

20/0

4/2

020

18/0

5/2

020

Adelaide

0.01%

-1.0%

-0.5%

0.0%

0.5%

1.0%

1.5%

2.0%

27/0

1/2

020

24/0

2/2

020

23/0

3/2

020

20/0

4/2

020

18/0

5/2

020

Perth


National home sales fell by around 42% in April compared with March… the lowest monthly reading since 1990


0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

Apr 00 Apr 05 Apr 10 Apr 15 Apr 20

Monthly sales with six month moving average, National

918 July 2019© CoreLogic, Inc. All Rights Reserved.© 2020 CoreLogic, Inc. All Rights Reserved. Source: CoreLogic, Westpac/Melbourne Institute© 2020 CoreLogic, Inc. All Rights Reserved.

Note: recent months of sales volumes are modelled estimates, and are subject to revision

Sales volumes are declining significantly as consumer confidence reaches its lowest levels since the early 90’s recession, however sentiment has shown a bounce back in May

0

10,000

20,000

30,000

40,000

50,000

60,000

0

20

40

60

80

100

120

140

May 90 May 95 May 00 May 05 May 10 May 15 May 20

Vo

lum

e o

f d

wel

ling

sale

s

Co

nsu

mer

sen

tim

ent

ind

ex

Consumer sentiment v Volume of dwellings sales

Volume of sales (RHS)Consumer sentiment index (LHS)


Jan

Feb

Mar

Ap

r

May Jun

Jul

Au

g

Sep

Oct

No

v

Dec

Rolling seven day count of CMA reports, Australia2019 v 2020

Seven day count 2020 Seven day count 2019

Real estate agents have seen a significant drop in activity, although activity has bounced back post Easter and continues to trend higher

Source: CoreLogic

Trending higher, but down 24% on same time last year as at May 17th

Pre-Easter: Down 60% on same time last year


159,413

0

50,000

100,000

150,000

200,000

250,000

300,000

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

2016 2017 2018 2019 2020

23,541

0

10,000

20,000

30,000

40,000

50,000

60,000

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

2016 2017 2018 2019 2020

New listing numbers have fallen sharply and could fall further over the coming months

New Listings, rolling 28-day count, national


28 days ending May 17-33% compared with last year

Total Listings, rolling 28-day count, national

28 days ending May 17-25.5% compared with last year


Mortgage related valuations activity has also levelled out, with refi activity helping to offset lower purchasing related valuations


22-Mar-20

17 Mar 19 17 May 19 17 Jul 19 17 Sep 19 17 Nov 19 17 Jan 20 17 Mar 20 17 May 20

Number of valuations events, Australia (rolling seven day count)

Easter 2019

Christmas / New Year period

Australia Day longweekend

Valuation numbers were tracking 25% below the March 22 peak and

are level with the same time last year

Rental markets are likely to see larger declines than housing values due to higher supply at a time of lower demand.

1418 July 2019© CoreLogic, Inc. All Rights Reserved.© 2020 CoreLogic, Inc. All Rights Reserved. Source: CoreLogic© 2020 CoreLogic, Inc. All Rights Reserved.

Annual change in rents

Rents have generally shown a softer trajectory than housing values, with early signs of weakness through April

Gross rental yields

2.9%3.2%

4.4%

4.4%

4.3%

3%

3%

4%

4%

5%

5%

6%


Sydney Melbourne BrisbaneAdelaide Perth

-0.7%0.7%0.9%

2.3%1.6%

-8%

-6%

-4%

-2%

0%

2%

4%

6%

8%

10%

12%


Sydney Melbourne BrisbaneAdelaide Perth

1518 July 2019© CoreLogic, Inc. All Rights Reserved.© 2020 CoreLogic, Inc. All Rights Reserved. Source: CoreLogic© 2020 CoreLogic, Inc. All Rights Reserved.

Month on month change in rents

7 of the 8 capital cities recorded a fall in rents through April… the first sign of a broad based weakening in rental market conditions

-0.7%

-0.5%-0.4%

-0.1%

0.1%

-1.1%

-0.1%

-0.7%

0.0%

0.1%

-0.2%

0.4%

0.0%

-0.4%-0.5%-0.5%

0.0%

-0.4%

Syd

ne

y

Mel

bo

urn

e

Bri

sban

e

Ad

elai

de

Per

th

Ho

bar

t

Dar

win

Can

ber

ra

Reg

iona

l NSW

Reg

iona

l Vic

Reg

iona

l Qld

Reg

iona

l SA

Reg

iona

l WA

Reg

iona

l Tas

Reg

iona

l NT

Co

mb

ined

cap

ital

s

Co

mb

ined

reg

ion

als

Nat

ion

al


Across all industries, payroll jobs have declined 7.3%, but the effect is more acute in some parts of the economy

Source: ABS© 2020 CoreLogic, Inc. All Rights Reserved.

-27.1%

-19.0%

-12.8%

-11.1%

-10.3%

-9.2%

-9.2%

-8.7%

-7.4%

-7.0%

-6.7%

-6.5%

-6.0%

-6.0%

-1.8%

-1.7%

-1.6%

-1.0%

Accommodation and Food Services

Arts and Recreation Services

Rental, Hiring and Real Estate Services

Professional, Scientific and Technical Services

Other Services

Administrative and Support Services

Information Media and Telecommunications

Wholesale Trade

Agriculture, Forestry and Fishing

Manufacturing

Transport, Postal and Warehousing

Construction

Retail Trade

Mining

Education and Training

Public Administration and Safety

Electricity, Gas, Water and Waste Services

Health Care and Social Assistance

Financial and Insurance Services

Change in payroll jobs between March 14th and 2nd May


Employment fundamentals will be an important determinant of the extent that housing demand is impacted

Portion of workforce employed in most impacted sectors

Source: ABS. Note the industries used to calculate 'most impacted sectors’ are accommodation and food services and arts and recreation services

12.7%

10.8%

9.7%9.2%

8.7% 8.6% 8.4%7.9%

Hobart Brisbane Darwin Sydney Adelaide Perth Melbourne ACT

By Capital City


Regions with high concentrations of vulnerable workforces generally have a higher incidence of renting households

Sydney - Inner West

Sunshine Coast

Gold Coast

Brisbane Inner City

Hobart

Melbourne - Inner

Sydney - City and Inner South

Darwin

Sydney - Eastern Suburbs

Perth - Inner

Sydney - Parramatta

Western Australia - Wheat Belt

Queensland - Outback

Toowoomba

0%

10%

20%

30%

40%

50%

60%

70%

80%

0% 2% 4% 6% 8% 10% 12% 14% 16%

Esti

mat

ed p

ort

ion

of

dw

ellin

gs t

hat

are

ren

tals

Portion of workforce employed in accommodation and food services, and arts and recreation services

Concentration of workforce in industries highly impacted by COVID-19, and portion of renting households - SA4 Regions, Australia

Source: ABS catalogue 6291. Note employment data of the portion of the workforce in arts and tourism is derived from the four quarter average to February 2020

Source: CoreLogic, ABS© 2020 CoreLogic, Inc. All Rights Reserved.


And this coincides with areas of significant rental stock increases

36.2%

34.1%

22.8%

13.4%

13.0%

12.5%

10.4%

10.0%

8.7%

8.6%

7.2%

7.2%

6.9%

6.2%

4.9%

4.7%

4.0%

3.1%

3.1%

2.7%

2.7%

2.6%

2.5%

1.0%

0.2%

0% 5% 10% 15% 20% 25% 30% 35% 40%

Melbourne - Inner

Sydney - City and Inner South

Sydney - Eastern Suburbs

Adelaide - Central and Hills

Warrnambool and South West

Gold Coast

Sydney - Sutherland

Melbourne - Inner South

Sydney - Inner West

Richmond - Tweed

Melbourne - Inner East

Newcastle and Lake Macquarie

Sydney - North Sydney and Hornsby

Geelong

Murray

Perth - Inner

Australian Capital Territory

Hobart

Barossa - Yorke - Mid North

Brisbane Inner City

Hunter Valley exc Newcastle

West and North West

Sydney - Ryde

Melbourne - North East

Sunshine Coast

Change in total rental listings by SA4 region - 22nd of March to 26th April

The next few months present an unprecedented shock to an economy with otherwise strong fundamentals.

The institutional response is about ‘building a bridge’ to the recovery phase, with stimulus totaling about 16.5% of GDP


Source: CoreLogic, ABS


-594,300

-700

-600

-500

-400

-300

-200

-100

0

100

200


Monthly change in jobs, Australia (,000)

The Australian labour market fell off a cliff in April, with the most severe declines recorded across part time jobs

-2.5%

-9.0%

Full time v Part time %

-221

-374

Full time v Part time ,000


Source: CoreLogic, ABS


63.5%

57%

58%

59%

60%

61%

62%

63%

64%

65%

66%

67%


Participation rate, Australia

6.2%

13.70%

3%

5%

7%

9%

11%

13%

15%


Unemployment rate v Under-employment rate, Australia

underemployment

unemployment

The Australian labour market fell off a cliff in April, with the most severe declines recorded across part time jobs


For those currently working, the loss of jobs and wages seemed to be stabilizing at the start of May

Index set at 100 in the week where Australia

reported its 100th case of Coronavirus

84.0

86.0

88.0

90.0

92.0

94.0

96.0

98.0

100.0

102.0

Index of job and wage levels across Australia

Wages Index Jobs Index

Source: CoreLogic, ABS.


Housing demand will be materially impacted by a stalling in overseas migration


-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

Mar 15 Mar 16 Mar 17 Mar 18 Mar 19 Mar 20

Annual change in number of overseas arrivals

77,36973,919

18,78913,970 12,900

3,110 1,726 542

Net overseas migration by capital city 2018/19


A freeze in international migration will greatly impact dwelling markets across NSW and VIC

Number of overseas migrants – four quarters to September 2019

82,113 81,665

31,370

17,071 14,175

2,725 2,535 389

VIC NSW QLD WA SA ACT TAS NT



While net-interstate migration may be a bright spot for Queensland dwelling markets

Interstate migrants by state of departure – 2 years to September 2019


-

50,000

100,000

150,000

200,000

250,000

QLD NSW VIC WA SA ACT TAS NT

State of Arrival

ACT NSW NT QLD SA TAS VIC WA


A longer term risk to housing values is a rise in distressed property sales associated with higher unemployment and rising mortgage arrears

Source: RBA

RBA Financial Stability Review, April 2020


Historically, housing values have been largely insulated from economic shocks, but

market activity has seen severe declines

The same phenomenon has played out over April. Property prices were steady, but

transaction volumes declined and estimated 40%

There are signs that transaction activity has reached a new normal, and is starting to

stabilize

One area of the housing market to watch is the rental market. Because of COVID-19,

rental demand is falling, which already had a severe impact on prices over April.

Downside risks for the housing market still include an increase in arrears rates,

making employment a key indicator to follow.

Key takeaways


Disclaimer

In compiling this publication, RP Data Pty Ltd trading as CoreLogic has relied upon information supplied by a number of external sources. CoreLogic does not warrant its accuracy or completeness and to the full extent allowed by law excludes liability in contract, tort or otherwise, for any loss or damage sustained by subscribers, or by any other person or body corporate arising from or in connection with the supply or use of the whole or any part of the information in this publication through any cause whatsoever and limits any liability it may have to the amount paid to CoreLogic for the supply of such information.

Queensland DataBased on or contains data provided by the State of Queensland (Department of Natural Resources and Mines) 2020. In consideration of the State permitting use of this data you acknowledge and agree that the State gives no warranty in relat ionto the data (including accuracy, reliability, completeness, currency or suitability) and accepts no liability (including without limitation, liability in negligence) for any loss, damage or costs (including consequential damage) relating to any use of the data. Data must not be used for direct marketing or be used in breach of the privacy laws.South Australian DataThis information is based on data supplied by the South Australian Government and is published by permission. The South Australian Government does not accept any responsibility for the accuracy or completeness of the published information or suitability for any purpose of the published information or the underlying data.New South Wales DataContains property sales information provided under licence from the Land and Property Information (“LPI”). CoreLogic is authorised as a Property Sales Information provider by the LPI.Victorian DataThe State of Victoria owns the copyright in the Property Sales Data which constitutes the basis of this report and reproduction of that data in any way without the consent of the State of Victoria will constitute a breach of the Copyright Act 1968 (Cth). The State of Victoria does not warrant the accuracy or completeness of the information contained in this report and any person using or relying upon such information does so on the basis that the State of Victoria accepts no responsibility or liability whatsoever for any errors, faults, defects or omissions in the information supplied. Western Australian DataBased on information provided by and with the permission of the Western Australian Land Information Authority (2020) trading as Landgate.Australian Capital Territory DataThe Territory Data is the property of the Australian Capital Territory. No part of it may in any form or by any means (electronic, mechanical, microcopying, photocopying, recording or otherwise) be reproduced, stored in a retrieval system or transmitted without prior written permission. Enquiries should be directed to: Director, Customer Services ACT Planning and Land Authority GPO Box 1908 Canberra ACT 2601.Tasmanian DataThis product incorporates data that is copyright owned by the Crown in Right of Tasmania. The data has been used in the product with the permission of the Crown in Right of Tasmania. The Crown in Right of Tasmania and its employees and agents:a) give no warranty regarding the data's accuracy, completeness, currency or suitability for any particular purpose; andb) do not accept liability howsoever arising, including but not limited to negligence for any loss resulting from the use of or reliance upon the data.

Base data from the LIST © State of Tasmania http://www.thelist.tas.gov.au

Get in Touch

Eliza OwenHead of Research, AustraliaCoreLogic

[email protected]

housing market trends...2020/05/21 · quarterly growth rates suggest that some housing markets had...

Documents