Australian property investors entered 2020 full of optimism. Melbourne and Sydney were both performing strongly, sending a ripple of confidence across the nation. Then along came COVID-19, and with it, a massive wave of uncertainty.
Investor conversations quickly turned from ‘where to buy’ to ‘what will the effect of COVID-19 be on the property market’.
When I read the following article it prompted me to reflect on my personal forecast now seven months ago.
What did you forecast & how accurate were you?
Here’s how your forecast compares with other Investors, as per the article written by William Jolly, from Savings.com.au
How accurate were Australians’ COVID house price predictions?
Most Australians predicted property prices would fall in 2020 back in April, but a fair chunk of them were well off the mark, according to new data.
A Budget Direct survey conducted in April found the majority thought property prices would fall over the following three to six months.
Of these, the vast majority anticipated an average fall of 20% or less, while around 13% predicted a fall of more than 20%.
Roughly 20% of the nearly 1,000 people surveyed figured prices would rise, with 12% forecasting price rises of up to 15% and 8% forecasting rises of more than 15%.
The remaining respondents said there would be no change in property prices.
How much do you think property prices will rise/fall over the next 3–6 months? – Australia
Source: Budget Direct
These predictions are somewhat in line with the predictions made by other major banks and research institutions.
The University of Melbourne forecast a 4.4% decline in the June Quarter (end of March to end of June), followed by another 2.3% drop in the September quarter.
Meanwhile, in May Commbank predicted a coronavirus-led house price drop of up to 30% in a worst-case scenario, while NAB also said in April house prices could drop by a cumulative 30%.
ANZ also said prices could drop by up to 13% in Sydney and Melbourne through to mid-2021.
But so far, house prices have remained resilient.
The CoreLogic Home Value Index for June showed that over the June quarter, national median dwelling values declined by just 0.8%, and despite recent falls, estimates of market activity showed a further improvement from the April low.
Indeed, capital cities like Hobart (1.0%), Adelaide (0.7%), Darwin and Canberra (0.4% and 0.7%) actually recorded quarterly dwelling price increases.
“Whilst COVID-19 hit us swiftly this year and threw Australian economy and property markets into turmoil, things settled down within the property market quicker than initially thought,” PRD Real Estate Chief Economist, Dr Diaswati Mardiasmo said.
“The key going forward will be increasing levels of employment, public and private investment and consumer confidence based on the ongoing impact of COVID-19.
“This sets the scene as we walk the tightrope to full economic recovery.”
Although there’s still the September quarter results to come, it’s looking like property prices could remain relatively stable, meaning those who predicted falls by more than 20% by September could be well off the mark.