Australian Property Update August 2020

https://www.youtube.com/watch?v=xBPNWQEkU24 In this property market update for August 2020 we'll be having a look at some of the data behind Australia's housing market and try to learn from it so we can invest more successfully. CoreLogic August 2020 Update Video Nugget News August 2020 Video 0:00 - Introduction1:15 - Australian market is in a decline2:05 - Capital city growth/decline figures4:21 - Rolling quarterly change4:59 - National home value index5:42 - Cash rates at all time low6:26 - New listings are rising8:05 - Percent change in dwelling values since COVID Peak9:33 - The fiscal cliff looming in October10:44 - Martin North's example predictions Recommended Videos: Brisbane Property Market Update August 2020 Transcription: hey i'm ryan from on property and welcome to my australian property market update for august of 2020. what i like to do in these episodes is to talk through where the market is at how is it performing at the moment has it gone up has it gone down what are the trends that we're seeing and what may happen in the future now i don't have a crystal ball i don't know what's going to happen no one out there really does but i think it's important for us to look at the data so that we can assess okay what do we want to do how do we want to invest at this point in time whether you're looking to take advantage of current market conditions and buy in a weaker market where there's less buyers to compete with maybe that's you still important to understand the data or if you're someone who's like okay with everything that's happening i actually want to wait this out until things start to improve it's important to look at the data as well so we're going to be learning this together talking through this together and i hope that you find this useful we're mainly going to be looking at corelogic's market update video and i'll link up to that in the description down below if you want to go through it yourself as i've got more data in there that we won't necessarily cover in this video they're great videos i watch them every single month and love them so looking at the australian property market as a whole for the month of june we are now in our third consecutive month of decline so june well july sorry declined 0.6 which was slightly less than june which declined 0.7 percent but yeah we're definitely in a declining market at this point in time and when i look at the data i find it hard to imagine that the market's going to grow in the near future so it looks like we might be in the beginning of an entrenched decline unless things start to turn around really quickly now obviously they could turn around things could change but i'm looking at it now and i'm kind of thinking okay we need to prepare for you know potentially a declining market or a stable market in the near future with everything that's happening globally if we jump ahead and we look at the month-on-month change in dwelling values for the major capital cities as well as the regional areas we can see that almost all the capital cities have seen some decline sydney and melbourne have had the biggest decline so melbourne's down 1.2 percent which is quite significant really sydney's down 0.9 if this trend continues like this level of declines if you play that out over a 12-month period you start to see significant declines of somewhere between you know 5 10 15 sort of range in those primary capital cities brisbane's down less 0.4 percent and if you've watched any of my previous videos you know that brisbane didn't have the big run-up that sydney and melbourne had it's cheaper to buy now than it was i think 11 years ago or even longer when you count inflation and so yeah brisbane saw some decline but not as much perth declined 0.6 which is really interesting because it's already had such a big decline it kind of looked like before covert that it was reaching the bottom of its i guess trough the bottom of its decline and that it may start to rise or at least stabilize but that's now down 0.6 percent so you know this is obviously affecting every capital city hobart's down 0.2 percent darwin down 0.3 percent adelaide is actually up 0.1 percent and canberra's up 0.6 percent holding steady there so you can see here really quickly that you've got lots of different markets in australia that are being affected at different rates sydney and melbourne had much bigger growth they had growth up until 2017 then they went through a period of decline 2017 to 2019 and then at the end of 2019 both of those markets saw some rapid growth so sydney melbourne had some you know really good run-ups in 2017 and again in 2019 so i would kind of speculate that they would have further to fall than somewhere like brisbane or perth which brisbane's been pretty steady perth's already been through a decline but nonetheless you know most of these markets are still in a decline at the moment and we'll have to keep watching it to see how it goes and to see what happens if we look at our rolling quarterly change in combined capital cities we've got this light blue line here and zero percent this is you know when we start to go into the negative so we can see that it was back in 2017 mid 2017 we were in the negatives all the way until when's that mid 2019 and then you can see that we started to see some really big growth over 2019 and we've now dipped back into the negative for those major capital cities so even not just monthly but on a rolling quarterly basis we're now in the negatives as well you can see here the national home value index which peaked in 2017 at 563 000 dollars for a value of a home and you can see that it went down and declined until mid 2019 and reached its low of around 516 000 then went through a massive run-up in just you know six to nine months almost back up to the peak that reached in 2017 so it reached 562 000 and we're now on a downward trajectory down to around 550 to 553 000 at the moment so we'll have to watch this and see you know will it start to level out will it continue to go down i'm not exactly sure cash rates are obviously really low it's interesting to look at this you've got this 10 year average here but that's really low anyway if you were to look at the average over 30 years or 40 years or 50 years it's going to be much higher than this 10-year average and you can see that we've basically almost reached the floor when it comes to interest rates so how much more can interest rates be dropped you know not not much 0.25 percent i think they can be dropped until we start going into negative interest rate territory and there has been talk that the government is willing to actually go down that route and to do that if required in order to keep the economy going so cash rates really low at the moment probably unlikely to go up anytime in the near future it's interesting to look at the number of new listings so we can see the number of new listings are reached a very like a low in that april may sort of period when everyone was in um lockdown or just after that when was that it's hard hard to remember as you can see i'm not in melbourne in lockdown at the moment but that started going up and you can see that the new listings are actually higher than what they were in 2019 now 2019 is kind of the lowest that we saw compared to 2016 17 and 18. so we're higher than that but we're not higher than those other years and if we look at the number of total listings they're still well below what they've been in the past so this means okay there's new listings coming onto the market but they're actually being purchased and being snapped up or potentially being withdrawn from the market and not sold but you can see that there's not this a flood of properties going on to the market none of them are being sold and so we're seeing this total number of listings actually skyrocket so this will be one to watch the number of new listings how high is that going to go as well as the number of total listings that will be really interesting to watch as well you don't want that to go too high because then we could start to see declines as well usually i would go through each of the cities and to talk about okay where are they at uh what's the trend in the cities but it's kind of hard to do at the moment we're in the early stages of this decline so i feel like a lot of the data around individual cities i just wouldn't have meaningful commentary on so i'm going to leave that out for this month maybe we'll go ahead and cover that next month here we have an interesting graph though this is the percentage change in dwelling values since the recent covert peak so since these markets peaked before covert how much of the markets as a whole gone down since this has happened and as we can see sydney and melbourne have gone down the most melbourne down 3.5 percent and i wonder if they'll continue to lead the charge in declines given that they have the worst hit covet area at the moment melbourne's in stage 4 lockdown all of that sort of stuff's happening it'll be interesting to watch how will that affect property prices compared to sydney who isn't currently in a lockdown state so there's not that i guess as much difficulty and as much pressure being put on businesses and the economy in sydney as it is in melbourne so melbourne down 3.5 percent sitting down 2.1 percent perth is actually outstripping sydney in declines at 2.2 percent we can see brisbane's down 0.9 percent adelaide's down 0.1 hobart 0.2 darwin 1.