The CoreLogic Home Value Index for November showed that national dwelling values were up 0.8 per cent 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 per cent 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, mostly 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 per cent, 18.5 per cent and 16.6 per cent, 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 per cent 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 home ownership 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 per cent 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 per cent 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.
Bianca Dabu, Smart Property Investment, 7 December 2020