Take Heart in the History of Housing
The coronavirus (COVID-19) has been responsible for stock market crashes, a surge in unemployment and no shortage of economic uncertainty. Naturally many homeowners are concerned about the value of their property, but history suggests there’s nothing to worry about.
Data provided by buyers’ agency Propertyology shows that in the three years coming out of Australia’s 1991/92 recession, all eight capital cities produced property price growth. Melbourne was the lowest at just 2%, but Perth delivered an impressive 27%. Regional centres were just as strong, and in some cases even stronger; Townsville managed 37% while Toowoomba grew 33%.
Propertyology Head of Research Simon Pressley says we saw a similar story just 12 years ago when the global financial crisis (GFC) struck. “Property prices again increased in eight out of eight capital cities over the three years ending 2010,” he highlights. Darwin and Melbourne were the best performing capitals with 32% and 21% growth respectively, but again regional markets were strong as the economy recovered.
|1991-93 (recession)||2008-10 (GFC)||2020-22 (COVID-19)|
|RBA Cash Rate||10% – 6%||7% – 4%||0.5% – xx|
|Unemployment Rate||9.5% – 11%||4.3% – 5.2%||5.2% – xx|
|Price Growth – Adelaide SA||N/A||12%|
|Price Growth – Brisbane QLD||17%||1%|
|Price Growth – Canberra ACT||26%||15%|
|Price Growth – Darwin NT||N/A||32%|
|Price Growth – Hobart TAS||20%||9%|
|Price Growth – Melbourne VIC||2%||21%|
|Price Growth – Perth WA||27%||2%|
|Price Growth – Sydney NSW||10%||16%|
|Price Growth – Toowoomba QLD||33%||19%|
|Price Growth – Townsville QLD||37%||6%|
These previous downturns show us that economic fluctuation does affect property, but it also tells us there’s no need to panic when housing price growth goes on pause. Just as in 2008, the Federal Government’s stimulus response has been dramatic and, along with positive economic factors and a healthy housing market prior to the crisis, puts the country in a great place to recover.
The added element of pandemic makes this crisis particularly unusual, but having the entire population stuck at home stands to result in a huge trading boom once we’re all free to venture outside and spend again. “There will be an enormous release of pent-up demand for goods and services,” says Pressley. “For property it’s likely to be akin to a flock of seagulls fighting over a chip.”
There’s understandably a lot of angst and uncertainty surrounding this crisis and the associated economic hiccup but when Australia recovers – and it will recover – the housing market will be leading the charge.