Insights

With the easing of restrictions in many states and the tightening of restrictions in others, it is becoming more and more unpredictable to gauge the effect the pandemic will have on the national property market.

In the month of June, national Australian house prices fell by 0.7%. This was the second consecutive monthly fall, following a 0.4% decline in the month of May. When we put this into perspective, with the annual growth sitting at 7.8% nationally, and considering the current situation caused by COVID-19, the repercussions to the housing market have actually been incredibly mild. There are several factors that have protected the property market during this time including persistently low advertised stock levels alongside substantial government stimulus and support and consistently low interest rates.

The fact that capital city dwelling values have declined by just a cumulative 1.3% over the past two months, highlights the resilience of our national property market and ability to withstand economic hardship. Housing is an illiquid asset, meaning it shows far less volatility and decline than other investments such as the share markets. Australians immense focus on property has only continued to increase during this period. In May alone, a record high audience of 11.9 million Australians visited realestate.com.au. Historically the Australian residential property market has fared well against negative economic impact and we are confident it will remain buoyant during this challenging time.

 

Definitions:

YTD – Year to date (YTD) refers to the period commencing the first day of the current calendar year up to the current date and the percentage (%) change from then until now.

 

Gross Yield – The “yield” of a property tells you how much of an annual return you are likely to get on your investment. It is calculated by expressing a year’s rental income as a percentage of how much the property is worth.

 

Total Return – is calculated from property value change as well as the gross rental yield. Typically, houses have a superior value growth performance while units offer superior rent returns. You can’t simply sum the Gross Yield and Annual Return figures together to calculate the Total Return, as the Total Return is based on an annualised Gross Yield, which differs from the Gross Yield shown in this graphic (month-end figure).