It’s the beginning of another month, and that means it’s time for our deep dive into the property data to give you an insight into what’s happening to our housing markets around Australia.
But before we get this information from Dr. Andrew Wilson, I’m going to ask his thoughts about Australia’s financial accounts and the announcement that we are now “officially” in recession.
Well it’s official… we’re in recession.
The Australian economy fell 7% in the June quarter to be down 6.3% over the year.
This means we are officially in recession and the quarterly decline was the biggest on record going back over 60 years.
While Australia may have officially moved into recession it has done so through outside circumstances and has made sure that the world’s longest economic expansion finished with a bang.
This has been a bit worse than many market commentators were expecting and the fall was greater than the RBA forecast of a 6% fall in the June quarter.
New South Wales and Victoria were impacted the most, with their respective state economies shrinking around 8.5% each, while Tasmania was hit hard by the disappearance of tourism.
While huge government support softened the blow, a collapse in private sector demand overshadowed the stimulus.
While the economy tanked 7%, household income actually rose 2.2% during the second quarter, however much of this would have been related to government stimulus.
Similarly, unincorporated businesses enjoyed a 22% increase in earnings.
The property pessimists must be running around a little confused at present.
We are five or six months into this coronavirus led downturn and while property values have eased a little over the last few months, it is been nothing like the horrendous forecast some people made in March or April.
In fact, annual price growth remains positive and while there has been some weakness in Melbourne, other markets are only showing moderating declines or tentative signs of stabilisation.
The more granular detail – by property type and tier – shows the adjustment since March continues to be led by ‘top tier’ markets, particularly Melbourne houses (‘top tier’ -7%; ‘mid tier’ –3%) but with notable declines in Melbourne units (‘top tier’ -2.6%; ‘mid tier’ -1.8%) and in ‘top tier’ units in Brisbane (-2.5%) and Perth (–2.4%).
At the other end of the spectrum, prices have been more resilient in smaller capital city markets, with solid gains in the 2.3-4.7% range for sections of the Hobart, Canberra and Adelaide markets.
Within the Sydney market, top and middle tier houses continue to see a softer price performance while bottom tier houses and units have seen prices about stable.
The adjustments to date mainly reflect the initial impacts of COVID-related disruptions.
The full effect of the COVID recession has yet to be felt.
Housing markets will face renewed pressure as household finances come under continued strain, population growth slows and as temporary measures – including temporary loan deferrals and supports for renters – start to be withdrawn.
This is expected to see a further round of price weakness, particularly as we head into year-end and early next year.
Auction Clearance rates
New properties listed for sale
Is this how scared we really are?
One guide to the measure of fear in the economy is the amount of $50 and $100 notes in circulation.
The annual growth of these notes in circulation Is the fastest in 29 years.
We may not be using cash, but we like to keep some on hand.
Now is the time to take action and set yourself for the opportunities that will present themselves as the market moves on
If you’re wondering what will happen to property in 2020–2021 you are not alone.
You can trust the team at Metropole to provide you with direction, guidance and results.
In challenging times like we are currently experiencing you need an advisor who takes a holistic approach to your wealth creation and that’s what you exactly what you get from the multi award winning team at Metropole.
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