The Impact COVID had on the housing market in seven charts
The COVID-19 pandemic sent Australia’s property market on a roller-coaster ride and the impacts are still being felt five years on, according to new research.
A report from CoreLogic found that one of the most significant impacts was how housing values changed.
Home values nationally rose by about 38.4 per cent since the pandemic took hold.
In that same period, wages increased by less than half the increase of housing.
These seven charts show how much the housing market has changed since COVID.
Regional housing values rising faster than capital cities
The report found that regional housing values have increased in relative terms more than capital cities.
Combined regional areas in Australia saw home values rise by about 56.3 per cent since March 2020.
During that same period, capital cities saw property values increase by about 33.6 per cent.
The strongest example of the rise in regional property values was between July 2020 and April 2022 when home values increased by about 47.6 per cent.
The report noted this was due to strong internal migration rates, which were supported by demand, and buyers were able to take advantage of more affordable housing prices.
During this period, home values in Gympie, in Queensland, and Bryon Bay, Ballina, Orange, Medowie, and Nelson Bay, which are all in NSW, rose by about more than 60 per cent.
“Early in the cycle, it was very much the markets described as ‘lifestyle’ regions that led the capital gains,”
the report said.
“The top regional growth markets over the most recent growth phase have been more diverse, featuring more rural Queensland markets such as Townsville, Rockhampton and Gladstone, as well as coastal markets of WA including Bunbury, Busselton and Geraldton.”
The report highlighted that the stronger growth in wider regional areas could have been due to affordability challenges in towns within a closer commuting distance to major cities.
It also added the shift toward more workers returning to the office, and an easing of working from home could be a factor.
Capital cities that have seen the highest rise in property prices
The capital cities that saw the greatest rise in home values were not Melbourne or Sydney, but capitals such as Perth, Adelaide and Brisbane.
The city that saw the biggest growth was Perth. It added about $348,519 to the median dwelling value.
“Coming into the pandemic, Perth’s median dwelling value was the second lowest of any capital city (after Darwin),”
the report said.
Despite the rise, the median home value in Perth was still affordable when compared to Sydney, Brisbane, Canberra and Adelaide.
Adelaide recorded the second-highest rise with home values up by more than two-thirds, or approximately $347,092.
Brisbane saw home values rise by about 68.7 per cent, and had the largest dollar value increase to its median property value at about $364,305.
“Brisbane has overtaken Melbourne and the ACT to record the second-highest median dwelling value of any capital city, after Sydney,” the report said.
Australia’s most populous city, Melbourne, saw home values rise by 8.4 per cent since March 2020 — the lowest growth rate of any capital city.
The report said this was due to disruption to the local economy as Melbourne saw the most days of lockdown than any other city in the country.
But also demographic changes with internal migration saw residents leave Melbourne in favour of a move either interstate or regional Victoria.
“Investor demand has generally been weaker than average across Victoria, reflecting the stronger growth prospects in other markets that were more attractive to investors,”
the report said.
“But also a higher property tax regime that has likely disincentivised investment demand.”
It also highlighted Victoria has built more dwellings per capita than other capital cities.
Melbourne home values had the lowest growth rate of any capital city. (ABC News: Danielle Bonica)
The rental market becoming increasingly unaffordable
The rental market has seen significant growth with CoreLogic’s national rental index rising by about 37.6 per cent since March 2020.
That was 5.8 times faster than the change in rents over the previous five-year period.
Currently, the national median rental rate is about $177 a week higher than in March 2020.
The report found the overall growth rate nationally for both houses and units was similar with increases of more than a third.
Similar to home values, regional rents are outpacing those in the capital cities.
Across regional markets there has been an increase of more than 40 per cent, while capital city rents have risen by about 35.8 per cent.
During the previous five-year recording period, regional rents rose by under 10 per cent, while capital cities rose by just over five per cent.
Perth recorded the biggest increase in any region in Australia with rents rising by about 63.9 per cent, which represented an increase of about $274 a week to median rents in the city.
The only regions in the country where rents have decreased when compared with the previous five years cycle were Hobart and the ACT.
“Rental trends have been losing pace as affordability challenges become more substantial for renters, the average household size gradually rises and overseas migration normalises,”
the report said.
Last month, the Grattan Institute called for the Commonwealth Rent Assistance payment to be raised by 50 per cent for singles and 40 per cent for couples.
Economist Joey Moloney from the independent think-tank repeated the call saying that rent assistance was an effective tool to ease the burden of low socio-economic communities in the private rental market.
“That works whether someone’s in the regions, whether someone’s in the cities,” he said.
Outside of the scheme, Mr Moloney said there were not many short-term solutions with the national rental vacancy rate at about 1.6 per cent, which was lower than the ten-year average.
“Because if your goal is to get the vacancy rate up, then you either need fewer renters or more rentals, and each of those things is tricky to do in the short term,” he said.
