What happened in Australian housing markets after the Global Financial Crisis (GFC) in 2008 could provide some insights on how they will emerge from the COVID-19 outbreak, according to a joint study by the Property Investment Professionals of Australia (PIPA) and CoreLogic.
Dwelling values in capital cities three years after the GFC rose by up to 39%, while in regional areas, values posted even more substantial gains of up to 65%. It is crucial, however, to take note that the bulk of the growth in regional areas was due to the mining areas, which were on an uptrend at that time.
“Areas such as mining towns, where economic conditions are dependent on a single industry, are much more likely to experience bursts of price rises or falls because of the strength or weakness of their dominant industries,” said Tim Lawless, head of research at CoreLogic.
Lawless said that while these regional areas hit “spectacular” capital gains post-GFC, they, a few years later, recorded a crash in home values as the mining boom moderated.
Across capital cities, a mix of inner- and outer-city suburbs rose as top performers. Sydney dominated this period, with six of its suburbs cracking the top 10 best performers during the three-year period. The top spot, however, belonged to Northern Territory’s Rosebery. Below is the list of the best-performing suburbs and their median values three years after the GFC.
PIPA and Corelogic provide an insight into housing markets by analysing housing data three years post-GFC to see how they recovered.
The Global Financial Crisis was a time of intense period of stress on global financial markets and resulted in a sequence of events that culminated in a near collapse of the banking system during 2007-2008.
At a Glance:
Capital city dwelling values had increased by up to 39 per cent over the three years from the end of December 2008
Melbourne’s best performers being inner areas, while Adelaide’s were those located in outer suburbs
Dwelling values in regional areas increased by up to 65 per cent over the same period
New research from PIPA and CoreLogic has identified the best performing capital city and regional locations three years after the GFC.
The research and analysis is a joint initiative of the Property Investment Professionals of Australia (PIPA) and CoreLogic.
Top 10 change in capital city dwelling values between Dec 2008 – Dec 2011
Source: CoreLogic
The CoreLogic research found that capital city dwelling values had increased by up to 39 per cent over the three years from the end of December 2008 – a time when Australia was emerging from the global economic crisis and government stimulus was ramping up.
PIPA Chairman Peter Koulizos said the capital city results showed a mix of inner and outer-city suburbs, with six of the top performers in Sydney.
“The dominance of Sydney in the results shows that nobody rings the bell to tell you when the upward swing of a property cycle has started,” said Mr Koulizos.
“When you do hear it, it’s too late because it’s already begun.
“I say this because most people believed that property prices in Sydney only started firming a year or so later – in 2012 – when it was already under way but perhaps masked by the continued economic uncertainty around the globe.”
Mr Koulizos said the individual capital city results were varied, depending on the location, with Melbourne’s best performers being inner areas, while Adelaide’s were those located in outer suburbs.
Top 10 change in regional dwelling values, December 2008 – December 2011
Source: CoreLogic
During that period of time, the number of first home buyers also hit historic highs, because of the Federal Government’s First Home Owner Boost, he said.
“The recovery in the property market was broad, varying from inner-city to outer-city suburbs,” said Mr Koulizos.
“Certainly, first home buyers helped by boosting demand for new properties, whether they were located in urban regeneration or greenfield sites.”
CoreLogic Head of Research Tim Lawless said dwelling values in regional areas increased by up to 65 per cent over the same period.
Mr Lawless said it was unsurprising that mining areas performed well given the resources sector was firing on all cylinders at the time.
“Areas such as mining towns, where economic conditions are dependent on a single industry, are much more likely to experience bursts of price rises or falls because of the strength or weakness of their dominant industries,” he said.
“While many of these mining regions recorded spectacular capital gains post-GFC, a few years later many of these same regions recorded a crash in home values.”
Mr Koulizos said the research showed the resilience of property prices during turbulent times.
However, while prices are expected to stand firm over the medium-term this time around, the best performing locations may be very different to what has occurred in the past.
“The way that people work will likely change significantly post-pandemic and this will have an impact on less traditional property investment locations,” said Mr Koulizos.
“Lifestyles will undoubtedly change, which will make living outside the inner-city more appealing.
“If you don’t have to go to the CBD every day for work, because you can work from home, then you don’t have to live near it.”
Property Investment Professionals of Australia (PIPA) and CoreLogic found that capital city dwelling values increased by up to 39 per cent from the end of December 2008, while regional Australia grew by 65 per cent.
CoreLogic head of research Tim Lawless said it was unsurprising that mining areas performed well given the resources sector was firing on all cylinders at the time.
“Areas such as mining towns, where economic conditions are dependent on a single industry, are much more likely to experience bursts of price rises or falls because of the strength or weakness of their dominant industries,” he said.
“While many of these mining regions recorded spectacular capital gains post-GFC, a few years later many of these same regions recorded a crash in home values.”
Unsurprisingly, Sydney was the strongest growing capital city, with six of the top 10 suburbs residing in the inner and outer belt of the harbour city.
“The dominance of Sydney in the results shows that nobody rings the bell to tell you when the upward swing of a property cycle has started,” PIPA chairman Peter Koulizos said.
“When you do hear it, it’s too late because it’s already begun.
Mr Koulizos noted that it has dispelled the popular belief that Sydney only grew in 2012 when the global economy had fully recovered.
While Sydney had six of the top 10 changes in capital city dwelling values, RoseberyPalmerston in the Northern Territory and Forde in the ACT took out the gold and silver medal.
This was followed by the inner-west suburb of Canterbury–Bankstown, Abbotsford in Victoria and Cabramatta in Sydney.
Mr Koulizos said the individual capital city results were varied, depending on the location, with Melbourne’s best performers being inner areas, while Adelaide’s were those located in outer suburbs. During that period of time, the number of first home buyers also hit historic highs, because of the federal government’s First Home Owner Boost, he said.
“The recovery in the property market was broad, varying from inner-city to outer-city suburbs,” Mr Koulizos said.
“Certainly, first home buyers helped by boosting demand for new properties, whether they were located in urban regeneration or greenfield sites.”
The best performing areas in terms of property prices could change as remote working will make living outside the inner-city more popular, according to research.
The new research has reflected on the performance of the property market post-GFC to gauge how prices might fare during economic shocks such as COVID-19.
The research and analysis, which is a joint initiative of the Property Investment Professionals of Australia (PIPA) and CoreLogic, has shown that property prices have remained resilient during turbulent times such as the global financial crisis (GFC).
Commenting on how the current economic crisis due to the coronavirus pandemic might impact property prices, PIPA Chairman Peter Koulizos said prices are expected to remain stable over the medium-term this time.
However, he predicted that the best performing areas could be very different this time compared with what has occurred in the past.
“The way that people work will likely change significantly post-pandemic and this will have an impact on less traditional property investment locations,” Mr Koulizos said.
“Lifestyles will undoubtedly change, which will make living outside the inner-city more appealing. If you don’t have to go to the CBD every day for work, because you can work from home, then you don’t have to live near it.”
The CoreLogic research analysed how property prices changed from December 2008 to December 2011, three years after the GFC.
The research found that capital city dwelling values had increased by up to 39 per cent over the three years from the end of December 2008 – when Australia was emerging from the GFC and government stimulus was increasing.
Mr Koulizos said the capital city results showed a mix of inner and outer-city suburbs, with six of the top performers in Sydney.
For example, dwelling values in Sydney’s Belmore in the Canterbury-Bankstown area increased by 32.6 per cent during this period, and 31.4 per cent in Cabramatta, Fairfield.
Values in Eastlakes rose by 31.3 per cent, Wiley Park jumped by 31.3 per cent, Chippendale rose by 31.0 per cent and Canley Vale rose by 30.5 per cent.
“The dominance of Sydney in the results shows that nobody rings the bell to tell you when the upward swing of a property cycle has started,” he said.
“When you do hear it, it’s too late because it’s already begun.
“I say this because most people believed that property prices in Sydney only started firming a year or so later – in 2012 – when it was already under way but perhaps masked by the continued economic uncertainty around the globe.”
Individual capital city results differed depending on the location, with Mr Koulizos stating that Melbourne’s best performers were inner areas, while Adelaide’s were those located in outer suburbs.
“The recovery in the property market was broad, varying from inner-city to outer-city suburbs,” Mr Koulizos said.
The number of first home buyers (FHB) also hit historic highs during that period of time, because of the federal government’s first home owner boost, he added.
“Certainly, first home buyers helped by boosting demand for new properties, whether they were located in urban regeneration or greenfield sites.”
CoreLogic head of research Tim Lawless said dwelling values in regional areas increased by up to 65 per cent over the same period.
Mining areas performed particularly strongly over this period, which Mr Lawless found unsurprising given the resources sectors “was firing on all cylinders at the time”.
“Areas such as mining towns, where economic conditions are dependent on a single industry, are much more likely to experience bursts of price rises or falls because of the strength or weakness of their dominant industries,” he said.
“While many of these mining regions recorded spectacular capital gains post-GFC, a few years later many of these same regions recorded a crash in home values.”
The CoreLogic research found that capital city dwelling values had increased by up to 39 per cent over the three years from the end of December 2008 – a time when Australia was emerging from the global economic crisis and government stimulus was ramping up.
PIPA Chairman Peter Koulizos said the capital city results showed a mix of inner- and outer-city suburbs, with six of the top performers in Sydney.
“The dominance of Sydney in the results shows that nobody rings the bell to tell you when the upward swing of a property cycle has started,” he said
“When you do hear it, it’s too late because it’s already begun.
“I say this because most people believed that property prices in Sydney only started firming a year or so later – in 2012 – when it was already under way but perhaps masked by the continued economic uncertainty around the globe.”
Top 10: Change in capital city dwelling values, December 2008 to December 2011
Suburb
LGA 2016
State
% change Dec 2008 to Dec 2011
Dec 2011 Median Value
Rosebery
Palmerston
NT
39.3%
$418,735
Forde
Unincorporated ACT
ACT
34.9%
$490,813
Belmore
Canterbury-Bankstown
NSW
32.6%
$525,267
Abbotsford
Yarra
VIC
32.0%
$659,434
Cabramatta
Fairfield
NSW
31.4%
$312,495
Eastlakes
Sydney
NSW
31.3%
$415,779
Wiley Park
Canterbury-Bankstown
NSW
31.3%
$292,781
Chippendale
Sydney
NSW
31.0%
$492,296
Kew East
Boroondara
VIC
30.9%
$898,797
Canley Vale
Fairfield
NSW
30.5%
$387,059
Source: CoreLogic
Mr Koulizos said the individual capital city results were varied, depending on the location, with Melbourne’s best performers being inner areas, while Adelaide’s were those located in outer suburbs.
During that period of time, the number of first home buyers also hit historic highs, because of the Federal Government’s First Home Owner Boost, he said.
“The recovery in the property market was broad, varying from inner-city to outer-city suburbs,” Mr Koulizos said.
“Certainly, first home buyers helped by boosting demand for new properties, whether they were located in urban regeneration or greenfield sites.”
CoreLogic Head of Research Tim Lawless said dwelling values in regional areas increased by up to 65 per cent over the same period.
Mr Lawless said it was unsurprising that mining areas performed well given the resources sector was firing on all cylinders at the time.
“Areas such as mining towns, where economic conditions are dependent on a single industry, are much more likely to experience bursts of price rises or falls because of the strength or weakness of their dominant industries,” he said.
“While many of these mining regions recorded spectacular capital gains post-GFC, a few years later many of these same regions recorded a crash in home values.”
Top 10: Change in regional dwelling values, December 2008 to December 2011
Suburb
LGA 2016
State
% change Dec 2008 to Dec 2011
Dec 2011 Median Value
Tennant Creek
Barkly
NT
65.7%
$181,278
Clunes
Hepburn
VIC
61.7%
$270,713
Port Hedland
Port Hedland
WA
40.3%
$1,088,817
Churchill
Latrobe
VIC
36.2%
$163,431
Cohuna
Gannawarra
VIC
35.1%
$154,938
South Hedland
Port Hedland
WA
34.6%
$714,145
Coonamble
Coonamble
NSW
33.8%
$100,210
Newman
East Pilbara
WA
32.9%
$700,556
Moranbah
Isaac
QLD
32.8%
$529,962
Kyneton
Macedon Ranges
VIC
32.6%
$348,577
Source: CoreLogic
Mr Koulizos said the research showed the resilience of property prices during turbulent times.
However, while prices are expected to stand firm over the medium-term this time around, the best performing locations may be very different to what has occurred in the past, he said.
“The way that people work will likely change significantly post-pandemic and this will have an impact on less traditional property investment locations,” Mr Koulizos said.
“Lifestyles will undoubtedly change, which will make living outside the inner-city more appealing.
“If you don’t have to go to the CBD every day for work, because you can work from home, then you don’t have to live near it.”
ENDS
For more information, or to organise an interview with Peter Koulizos, please contact:
Bricks & Mortar Media | media@bricksandmortarmedia.com.au | 0405 801 979
About PIPA
Property Investment Professionals of Australia (PIPA) is a not-for-profit association established by industry practitioners with the objective of representing and raising the professional standards of all operators involved within property investment.
