We are in the final two months of the year and still the coronavirus is injecting uncertainty into the global economy. With 50 percent odds U.S. authorities will approve a vaccine in Q1 2021 and 44 percent odds it’ll be later (according to Hypermind.com), it looks like we still have a little while yet until more clarity enters the market.
Nevertheless, positive news emerging from the property market has been reassuring for property investors and homeowners. The CoreLogic Monthly Home Value Index showed property price increases for all capital city markets year-on-year, with houses performing better than units and Canberra leading the charge. We are always mindful when assessing Canberra as a market as it tends to be overly dependent on government employment (so it’s no surprise the market has responded well to skyrocketing expenditure on government programs).
Interestingly, it looks like owner occupiers have been doing the bulk of heavily lifting when it comes to market activity. The latest figures from the Australian Bureau of Statistics indicate a 41 percent increase in monthly new home loan commitments between the May 2020 trough and September. Loan commitments by investors have returned to pre-COVID levels, but we expect that figure to increase at whatever rate banks will allow based on the trove of available incentives.
SQM Research indicates that all capital cities (except Melbourne) have continued to enjoy downward rental vacancy rates, with most reaching their peak around April-May. Some are finding themselves in a state of significant undersupply. Perth, Hobart, Adelaide, Darwin and Canberra are all below 1 percent. It will be interesting to watch these figures as things return to normal and the population responds to months of delayed construction activity.