Real estate has proven its resilience once again as prices
rise over the year and forecasts point to further strengthening, the Property
Investment Professionals of Australia said.
The CoreLogic
Home Value Index for November showed that national dwelling values were up 0.8
percent over the month, with every capital city, apart from Melbourne,
posting positive results and regional areas performing even more strongly.
According to PIPA chairman
Peter Koulizos, the results were in stark contrast to some of the
doom-and-gloom property price forecasts at the start of the pandemic.
"Big banks and some property
commentators were predicting property price falls of anywhere from 10 to 30 per
cent. At the same time, PIPA produced research to show that house prices had
increased by as much as 100 percent in the five years after the most recent
recessions.
"For some reason, even though
our analysis looked at every downturn or recession over the past 50 years,
plenty of people were still expecting property prices to fall off a cliff this
time around,” Mr. Koulizos said.
PIPA’s data found that, five
years after each of the recessions or economic downturns over the said 50-year
period, capital city house prices often increased significantly.
"Some locations performed
better than others, most likely due to local economic factors after each
period.”
Following the most recent
2009 downturn, for instance, Sydney, Melbourne, and Darwin posted
double-digit growths five years later in 2014, with prices increasing by 39.7
percent, 18.5 percent, and 16.6 percent, respectively.
SQM Research has also now
forecast strong annual growth in most capital cities in 2021, with annual
dwelling price growth of up to 12 percent predicted in some locations.
According to Mr. Koulizos,
government stimulus measures and record-low interest rates were always going to
help protect property prices, just as they did several times in past economic
downturns.
"It has always been a
priority to protect the wealth of everyday Australians whose biggest asset is
usually their homes,” he said.
"Lowering interest rates to
support homeownership but also to encourage more spending generally has long
been a successful policy during economic downturns, coupled with other stimulus
measures.”
The positive price hike in
November supported the results of the 2020 PIPA Annual Investor Sentiment
Survey in August, which found that nearly 75 percent of investors expected
property prices to be the same or better in their state or territory in 12
months’ time.
The survey also indicated
that 71 percent of investors were less likely to sell a property over the next
12 months because of the pandemic, "which is no doubt part of the reason for
the continued low supply of listings in some locations around the nation”, Mr
Koulizos concluded.
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Jason Gwerder
Monday, 14 December 2020
