There’s no denying COVID-19 and the quarantine that kept us all in isolation for the better part of the last three months has disrupted Australia’s property markets in a number of ways.
The actual future fallout is of course, a topic of hot debate in real estate circles, with some economists betting on the bear and forecasting a devastating downturn. While others chuckle at the naysayers and suggest this will only be a minor blip in an otherwise bull-ish market.
Of course no one has any definitive answers; all we can really do as investors is continue to wait, watch and see what might happen.
And if recent observations are anything to go by, Canberra’s property market might just be the strongest contender to come out on the other side of the COVID-wave as the next inner city housing hotspot.
A beacon of hope among bleaker prospects
Right now we’re in what appears to be an “eye of the storm” type scenario, when it comes to understanding what the true impact of our prolonged state of ISO might be.
Tenants, landlords and homeowners alike have been sheltered from the initial effects of the storm, with 6 month deferrals on mortgage repayments for those experiencing financial hardship, and other measures to relieve some of the possible pressure people are currently feeling.
Meanwhile, unemployment is now the highest it’s been since the turn of the century, officially sitting at 7.1 per cent in May, and more than 300,000 households have so far taken up their lenders’ offer of a home loan holiday.
Hence, the big question on everyone’s lips is what happens when the 6 months comes to an end, towards the year’s end; when property transactions traditionally tend to slow down due to seasonal demand? Could we be staring down a tsunami of forced sales?
Some financial commentators suggest lenders will need to introduce counter-measures, to avoid hundreds of thousands of customers defaulting on their mortgages all at once.
And although many argue that less migration and various economic factors will slow market activity, we also have to consider that new home construction has slowed significantly.
So while we might conceivably see more listings by the close of 2020, it’s far from certain that we’ll witness a sudden flood of stock, forcing markets into a nose dive.
One thing many market watchers seem to find consensus on however, is that our very own Canberra is the shining a beacon of hope amongst the nation’s potential doom and gloom.
Canberra – the “quiet achiever”
According to recent data from Domain, Canberra’s property market is the “quiet achiever”, with dwelling values reaching a new peak for May after experiencing 6.3 per cent growth over the past year (0.7 per cent last month).
Anecdotally, looking at recent auction clearance rates and market activity in the region, we haven’t seen any noticeable drop when it comes to demand or values here at Trilogy.
In fact we’re observing a growing trend, with upgraders who’ve perhaps been stuck working and schooling their young families from home for the past few months, suddenly thinking they could use a little more room to move.
On top of buyers seemingly reverting back to the good ol’ days of large McMansions on sprawling suburban blocks, less people are listing their homes here too.
Over the last 12 months, total available stock has fallen in our nation’s esteemed capital by a massive -27.5 per cent.
Meanwhile, the median house price for Canberra is now only second to Sydney, at $713,000 with the average time on market at 49 days and the average vendor discount being just -1.6 per cent; the lowest for any capital city.
The new post-Corona kid on the block
Overall, research indicates that Canberra might just be the hottest capital city to buy in over the next 12 months, as the property markets enter a new, post-COVID era.
According to Propertyology’s Head of Research Simon Presley, “Canberra has shot to the top of capital city rankings,” when it comes to the latest 12 month forecast.
“The primary reason for Canberra’s housing market elevation is an anticipated lower economic impact from COVID-19.”
Pressley said Canberra’s strong pre-pandemic market and economic fundamentals, including good employment levels, infrastructure and development projects, have largely sheltered the city from any serious shock; creating a much rosier post-Covid outlook.
Given Canberra is predominantly made up of government and public sector employment, it’s less likely that local homeowners will lose their jobs and be forced to sell up. Hence, the outlook for Canberra is far brighter than in other areas of the country.
“Canberra’s economy was already strong before the germ arrived,” said Pressley. “And with approximately 100,000 of its 213,000 workforce in the public sector, it will be significantly shielded through the COVID job lock-down period.
”Logic would also suggest an expansion of Canberra’s public sector workforce will be needed to help administer the federal government’s record $320 billion COVID-19 support packages.”