Residential Property Prices in Victoria _August 2020

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Data insights

Residential property prices in Victoria There have been many observations about the size and duration of the impact the coronavirus crisis is having on residential property prices. The uncertainty around the pandemic’s longevity and accompanying restrictions play a huge part in the confidence of consumers and performance of the real estate market. Both Median Prices and the Residential Market Index (RMX) have a role to play in understanding the property market. The latest quarterly median prices revealed that the market is still strong. While there has been a small adjustment from the previous quarter, the market is in much better shape than it was in 2019 across all property types. An important tool to help monitor current price trends is the RMX, updated weekly. The RMX considers all properties (not just the ones sold) and gives weekly insight into real price movement over time, a more accurate and up to date reflection on current price trends.

How to read the RMX The current RMX reference period is 2016, equivalent to 100.0. This aligns property prices with the most recent ABS census data at the time of release.

Prices of housing in Victoria has been on a positive trajectory after the introduction of eased restrictions in mid-May The illustration shows weekly RMX values and highlights the timeline of tightening restrictions in Victoria (grey) and easing restrictions (blue). Data up to week ending 9 August 2020.

130

120

110

100 JAN

FEB

MAR

APR

MAY

JUN

JUL

AUG

The price trend for residential homes in the past 12 months appears similar with the same period two years ago The illustration compares same week in previous years. Data up to week ending 9 August 2020.

2020/19

2019/18

2018/17

135

This means that the property price weighted average in 2016 was given a value of 100.0 and price movements over time are relative to this ‘base’ reference period. In simple terms, the current RMX value of 132.3 (9 August, 2020) means that on average, properties in Victoria today are worth 32.3 per cent more than they were in 2016.

Victorian price performance so far this year After the expected seasonal dip around January, the RMX recorded strong price growth across all residential homes. The incline began in February and peaked in mid-March, where the price index was heading into possible new record levels. At the end of March, COVID-19 restrictions first came into effect. Around this time, the value of homes in Victoria started to gradually decline each week. 26 | THE ESTATE AGENT – AUGUST 2020

132.3

130 125 120

118.4 118.3

115 110 Sep ‘19

Nov ‘19

Jan ‘19

The trend began to change its course following the announcement of first stages of easing restrictions halfway through May. Note: The RMX usually dips in January and July when transaction volumes are typically lower. The recent reintroduction of stage 4 restrictions for metro Melbourne and stage 3 restrictions for regional Victoria are causing concern over its impact on property value, the latest RMX result

Mar ‘20

May ‘20

Jul ‘20

Sep ‘20

for the week ending 9 August (132.3) suggests prices continue to grow strong for the time being. Monitoring the RMX weekly can give some insight into the scale of impact it may have in the coming weeks.

The impact varies for different regions The latest quarterly median price for houses in regional Victoria showcases its stability, with prices up 0.1% from the previous quarter. Although units contribute a small portion of regional


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Residential Property Prices in Victoria _August 2020 by Real Estate Institute of Victoria - Issuu