Australian housing market defies expectations during COVID-19

As the Coronavirus pandemic continues to grip the nation, the Australian property market has stayed resilient and surprised economists, industry experts, and homeowners.

Prior to lockdown, industry experts predicted property prices would plummet 10-20% across the board as a result of COVID-19. Concerns arose the pandemic would affect buying and selling amid job cuts, open home restrictions, tenant evictions and the restriction of Asian buyers.

How has the market reacted?

Three months into the Australian COVID-19 health crisis, the property market has shown unexpected resilience and remained quite healthy in many regions.

Regions dependent on tourism and hospitality took the brunt of the damage, with lockdown restrictions severely cutting household incomes and affordability across low- to middle-income regions. According to REA Group, Suburbs such as Carlton in Mel, Glenorie in Syd, and Balmoral in Bri saw prices fall up to -24% year on year.

Those in top-end and inner-city suburbs fared better, with property prices seeing increases of up to 54% in Tyabb Melbourne year on year. Other significant YoY price rises occurred in Sydney’s Petersham (33%), Brisbane’s Fig Tree Pocket (31%), and Melbourne’s Box Hill South (25%).

It is prudent to say the full impact of COVID-19 has yet to be felt as Australia is only 3 months deep into the health crisis. Industry experts claim a complete V shaped recovery will be hindered by the recent Victoria COVID outbreak.

Are Home Buyers and First Home Buyers affected?

With distancing restrictions imposed, home buyer sentiment took a toll during March and into April. Innovations such as digital open homes and virtual walkthroughs emerged as a contingency for those in tightly locked down areas looking to buy.

However, First Home Buyers have sprung into action with the introduction of the Government’s First Home Loan Deposit Scheme in January, and the HomeBuilder scheme later in June this year, as recorded by financial comparison site Canstar.

Canstar reports home loan providers have seen an uptick of First Home Buyer and construction enquiries as a result.

Is now a good time to refinance?

Many home owners are taking advantage of the record-low interest rates available in Australia. Borrowers are looking to save more during hard times by refinancing to lower interest rates and reducing their monthly mortgage repayments.

Adding to that, more and more lenders have come to the table offering competitive interest rates as a way to attract refinancer attention and help Aussies save as much as possible during the pandemic.

In May 2020, multi-award winning lender Reduce Home Loans released the record-breaking variable interest rate of 2.19% p.a. on the new Super Saver Variable  (2.19%*p.a. comparison rate).

Reduce Home Loans also offered further owner occupier loan rate drops to the Low Rider Variable, Penny Pincher Variable and Rate Lovers Variable.

Low Rider Variable 2.25%p.a. (2.28%*p.a. comparison)

Penny Pincher Variable 2.29%p.a. (2.29%*p.a. comparison)

Rate Lovers Variable 2.39%p.a. (2.42%*p.a. comparison)

Am I eligible for a low rate home loan?

Find out if you’re eligible for a home loan from Reduce by calling us on 1300 733 823, or submit an enquiry online. Standard lending and servicing criteria apply.

This advice is general and does not take into account your objectives, financial situation or needs. You should consider whether the information in this article is suitable for you and your personal circumstances. Consult your personal finance manager before making any financial decisions.