An encouraging month for property investors

Posted by Luke Graham

As the first half of 2020 comes to a close, property investors are offered a month of positive news following the uncertainty caused by coronavirus.

Victorian property prices

Amidst the wildly varied predictions about how the property market will (or won’t) perform due to these unique circumstances, the Real Institute of Victoria (REIV) have reported a promising month for house prices. According to their index, house prices in the state bottomed out around ANZAC Day and have since returned to where they were in February before the outbreak began. In other words, if you purchased a property in February 2020, you could expect it would be worth about the same now. If you purchased it in the preceding months, you likely have some small level of positive equity.

Auction volumes

When it comes to auctions, we tend to look at Sydney as a national benchmark. The weekend with the most sales at auction was the last of February. Following that, the number of auctions skyrocketed (as panicked sellers tried to dump their assets) and the clearance rate plummeted (because buyers were becoming more risk-averse). This occurred at the same time consumer confidence plummeted, indicating that the greatest period of uncertainty and discomfort was being felt in late-February and early-March. Over May and June, the number of sales achieved at auction has steadily increased. Current levels are akin to late-summer levels.

Rental vacancies

There’s no doubt the JobKeeper allowance went some way to prevent significant economic hardship in Australia since the outbreak began. In particular, it enabled many people to continue paying their rent or mortgage instead of the holiday periods being offered. This was responsible, as it prevented the can being kicked down the road on household debt. It also prevented an upswing in rental vacancies, with the notable exception of areas highly dependent on migrants and overseas visitors. Two proximate inner-Brisbane suburbs shed some light on the significant contrasts being experienced in rental vacancies. Since the coronavirus outbreak, Hamilton’s vacancy rate has actually been stable. On the other hand, tourist hotspot South Brisbane has seen vacancy rates skyrocket. Having an asset that suits the local demographic appears to be a superior strategy during this crisis. We will be looking into vacancy rates more next week, as well as the rental market more broadly.