Australia House Price Growth Slows as Sales Plunge in Lockdown

(Bloomberg) -- Australia house-price growth slowed in April and sales plunged, after home inspections and public auctions were prohibited as part of a sweeping economic lockdown to combat coronavirus.

House values in the combined state and territory capitals rose 0.2% last month, according to CoreLogic Inc. data released Friday. That's down from a 0.7% gain in March. Sales plunged about 40% as buyers retreated from the market and new listings dried up, CoreLogic said.

While the property market held firm in the face of spiraling unemployment and plunging consumer confidence, it “looks inevitable” there will be some downward pressure on prices in coming months, said Tim Lawless, CoreLogic's head of research.

“The magnitude of housing value falls depends on a broad range of factors with most hinging on the timing and extent of social-distancing policies being lifted,” he said.

“The good news is that Australia has managed to flatten the spread of the virus and we are already seeing a subtle easing of social-distancing policies in some states,” he said. “An early return of economic activity should support a lift in consumer spirits which in turn should see housing market activity sparking back to life.”

Some states, including New South Wales and Queensland, have already started to ease some restrictions on people's movement, and Prime Minister Scott Morrison has said the lifting of some nationwide measures “is not too far away” as the daily growth in infections holds below 1%.

Also supporting the property market is the unprecedented level of fiscal and monetary support being pumped into the economy. Banks are also giving financially-stressed borrowers six-month mortgage holidays, limiting the flow of distressed sales, which Lawless said could have otherwise been a source of more significant downward pressure on home values.

“No doubt the coming month will provide more clarity about the direction of housing markets,” Lawless said. “One of the most important indicators to follow will be measures of consumer sentiment. If consumer spirits start to bounce back to more normal levels, this is when we should start to see housing activity lift from current low levels.”

Among the state and territory capitals, prices rose 0.4% in Sydney and Adelaide and 1.7% in Darwin. Values in Melbourne declined 0.3%. Hobart was the only other capital city where prices fell, down 0.1%.