Property Market Update – Reaction to COVID-19

Since the government shutdown non-essential services and placed a temporary ban on auctions and open for inspections, and essentially halted the economy in response to COVID-19; as expected, the property market has been impacted.

From a values perspective, the CoreLogic hedonic index has been showing a loss of momentum in housing value growth rates since mid-March. Data through to mid-April has seen a continuation in this trend, with the combined capital city measure slipping into negative territory week-on-week for the first time since early August last year.

Agent activity and listings have fallen 

The first of these metrics is CMA generations. A CMA is a ‘comparative market analysis’ report, that is generated by real estate agents using the RP Professional platform to get information on an individual property.

The report is used by a majority of real estate agents in Australia to research recent comparable sales and market trends, often in order to prepare a property for sale and set an expectation around pricing. Therefore, the generation of a CMA report can be a leading indicator of new ‘for sale’ listings volumes.

This is reaffirmed by the graph below, which shows the rolling 7-day change in CMA generations and listings.

In the 28 days to Easter Sunday 2020, the number of new residential listings advertised for sale across Australia was 24,051. This is by far the lowest level of listings for this time of the year in years and is 27.3% below the equivalent period last year.

The extent of decline in activity across CoreLogic platforms shows clear signs of a sharp slowdown in market activity. With plunging property volumes across listings, and less activity from real estate agents and valuers, there is likely to be a severe drop in the number of properties being transacted over the coming weeks and months; at least until social distancing policies are lifted and sentiment levels return to more normal levels as the economy emerges from the COVID-19 slump.

But less listing activity also speaks to the moderation of supply against less demand for property. This is one reason that property values are unlikely to fall as quickly, or the same extent, as transaction volumes.

Source: CoreLogic. To read the entire article click here.