Australian house prices have defied predictions made at the start of the global pandemic, with properties in all but one capital city increasing during 2020 and regional property prices rising almost three times as fast. Forecasts from spring 2020 suggested that property prices would take a hit as lockdown and other measures put in place to contain the virus would affect the market.
House sales did slow down by approximately 40% at the peak of the virus and prices between April and September dropped by around 2%. However, the market has since seen an unprecedentedly strong recovery. By the end of the year, house sales were up on the previous year overall and property values had risen by around 2%.
Health experts have praised Australia for its fast and hard reaction to the pandemic. The country closed borders early and imposed internal restrictions on travel and socialisation to stem the spread of the virus. In March 2020, economists were predicting that these nationwide lockdowns and other measures would result in the risk of up to a 20% drop in house prices. However, the measures taken not only successfully limited the number of coronavirus-related deaths but also allowed life to return to normal across large areas of Australia faster than predicted. This in turn has resulted in a faster economic recovery.
House sales have also been helped by government incentives, with interest rates being slashed to an historical low of 0.1%. This was coupled with a financial stimulus package designed to keep people in paid employment during lockdown, which limited unemployment rates to around 6.8%.
Lenders also provided temporary assistance to homeowners in the form of emergency mortgage repayment holidays to allow them to take a break from repayments at the height of the crisis. With more remote working opportunities as a result of the virus, homes in regional areas are becoming more desirable and property prices in these areas have risen significantly. The highest rises were seen in Tasmania, where property values have soared by 12% compared to the previous year. Of the capital cities, all but Melbourne have seen small rises in house prices that look set to continue on an upwards trajectory.
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