The Australian economy continues to feel
the effects of COVID-19, with the virus and virus response likely to affect every aspect of the economy for years to come. While far from immune, the housing market has been fairly strong in the face of very significant challenges. According to recent data, house prices have outperformed wages over the past financial year due to a weak labour market and better than expected property prices. While this is good news for many property owners, it does put home ownership further out of reach for some.
According to data from Domain, house prices
have been stronger than wages growth in every capital city but two over the
last year. Despite the very real impact of the pandemic on dwelling prices, the
impact of COVID-19 on employment and wages has been even more pronounced.
Overall, national wage growth was just 1.7% in the year ending June, with house
price growth up 6.6% leading to a discrepancy of 4.8%. According to Domain
senior research analyst Nicola Powell, “Overall for Australia, wages growth has
hit the lowest rate in 23 years.”
Once again, national property data
highlights the very different markets of Australia. Sydney house prices
finished the financial year 10.5% higher than the previous year, but NSW wages
were up just 1.8% leading to a huge discrepancy of 8.7%. Melbourne house prices
were 6.9% higher in June than a year ago, with Victorian wages also growing by
1.8% for a discrepancy of 5.1%. Reasonably strong economic conditions in
Victoria earlier this year paint a somewhat unrealistic picture, however, as
the prolonged lockdown in Melbourne continues to put significant pressure on
house price growth.
The strongest property growth figures were
recorded in Hobart and Canberra at 10% and 9.3%, with wage growth of 2.4% and
2.0% leading to a comparable discrepancy of 7.6% and 7.3%. The situation was
similar across much of the country, with Perth and Darwin the only state
capitals to record positive wage growth compared to house prices at 3.1% and
2.4% respectively. The counter trend witnessed in Perth and Darwin could spread
nationwide over coming months, however, with house prices continuing to fall as
hourly wages hold flat.
Sydney house prices fell 2% in the June
quarter while wages held flat, and Melbourne house prices dropped by 3.5% in
similar labour market conditions. According to Dr. Powell, with “what we have
picked up in the COVID quarter, all cities over that quarter we’re seeing wage
outpace price apart from Hobart and Canberra.” While it may take a little while
for these results to emerge in annual figures, house prices continue to drop in
Australia's biggest markets.
According to separate figures from
CoreLogic, house prices in Melbourne have dropped by almost $30,000 over recent
months. The median value of a Melbourne property now sits at $667,520, marking
a 1.2% drop in August and $28,000 decline over the course of the pandemic. The
situation in Sydney is not nearly as pronounced, with the NSW capital down 0.5%
in August to a median value of $860,182. Brisbane was the only other state
capital to record negative growth in August, dropping 0.1% to $503,128.
Nationally, Australia's median dwelling value dropped 0.4% during August to