Australian dwelling prices have started to recover eight months since the onset of the COVID-19 pandemic, with all capital cities except Melbourne posting gains in October, according to the latest market update from CoreLogic.
The median dwelling price hit positive territory in October, rising by 0.4%. Adelaide and Darwin were the strongest performers during the month, recording price gains of 1.2%.
Of all capital cities, only Melbourne remained in the red, with a price decline of 0.2%. The drop in the city's house prices however, has been easing since mid-September, with the latest being the smallest month-on-month drop since April.
Tim Lawless, head of research at CoreLogic, said since the restrictions on private homes and auctions were lifted across Melbourne, new property listings have surged and clearance rates have started to improve. These reflect that buyer activity is recovering.
"Based on this recent trend in housing values and activity, it seems likely we will see Melbourne follow the other capital cities towards a recovery over the coming month," he said.
Lawless said detached homes remained the bigger driver of price gains. Over the month, house values went up by 0.4%, offsetting the 0.2% decline in unit values.
While unit values have shown smaller declines in values than houses through the COVID-19 period so far, Lawless said things are likely to change as the unit segment is more exposed to the impacts of the outbreak. This is particularly true in the key inner-city precincts of Melbourne and Sydney.
"These areas have a higher concentration of unit stock, and historic exposure to demand from overseas migration. Low levels of investment activity, relatively high supply of unit stock in inner-cities and international border closures are key factors that imply units will under-perform relative to houses over the medium term," he said.
Regional areas continue to outperform capital cities during the COVID-19 outbreak. In fact, regional dwelling values have increased by 1.7% while values across the combined capitals index have fallen by 2.3% in the seven months since March.
"The newfound popularity of working from home is only one factor helping to support regional home prices. More affordable price points, lower densities and lifestyle factors, are also under-pinning the relative strength across many regional areas of the country," Lawless said.
