Best Performing Suburbs Post-GFC

Covid-19 has significantly impacted the property market, with consumer confidence low and unemployment deterring buyers and sellers.

House price declines nationally have not been uniform in nature, with some specific markets not recording price declines at all, despite the deep recession caused by the pandemic.

Dwelling prices in Sydney have fallen by 2.1 per cent over the past three months, while Melbourne has lost 3.2 per cent. Nationally, prices are down by 1.6 per cent.

While the length and severity of the downswing remains uncertain, economists have pointed to the rapid rebound in house prices in the years following the 2008-09 global financial crisis.

Taking a historical perspective, property research house Corelogic has identified the best-performing capital city and regional locations in the three years following the GFC.

Corelogic found that capital city dwelling values had increased by up to 39 per cent in select suburbs in the three years from December 2008, while a number of regional locations experienced price increases north of 66 per cent.

Change in capital city prices

SuburbLGAState% change Dec 2008 - Dec 2011Dec 2011 Median Value
Wiley ParkCanterbury-BankstownNSW31.3%$292,781
Kew EastBoroondaraVIC30.9%$898,797
Canley ValeFairfieldNSW30.5%$387,059

^ Source: Corelogic, December 2008 to December 2011

The research, undertaken in a joint initiative with the Property Investment Professionals of Australia (PIPA), revealed a significant uplift in varying locations following the global economic shock.

Capital city results showed a mix of inner-and outer-city suburbs, with six of the top performers based in Sydney while Melbourne’s best performers were located in inner areas and Adelaide’s in outer suburbs.

Corelogic said state government-led stamp duty waivers for first home buyers also played a pivotal role in buoying the flagging market at the time.

The Rudd government tripled the first home buyer grant to $21,000 for the purchase of new homes to prop up the industry during the GFC.

Corelogic head of research Tim Lawless said dwelling values in regional areas increased over the three-year period—driven by the boom in the resources sector at the time.

“Areas such as mining towns, where economic conditions are dependent on a single industry, are much more likely to experience bursts of price rises or falls because of the strength or weakness of their dominant industries,” Lawless said.

“While many of these mining regions recorded spectacular capital gains post-GFC, a few years later many of these same regions recorded a crash in home values.”

Change in regional house prices

SuburbLGAState% change Dec 2008 - Dec 2011Dec 2011 Median Value
Tennant CreekBarklyNT65.7%$181,278
Port HedlandPort HedlandWA40.3%$1,088,817
South HedlandPort HedlandWA34.6%$714,145
NewmanEast PilbaraWA32.9%$700,556
KynetonMacedon RangesVIC32.6%$348,577

^ Source: Corelogic, December 2008 to December 2011

Economists have warned that the current economic situation differs from the 2008 crisis, with ultra-low interest rates of 0.5 per cent likely to a be more substantial driver of the property market than share price movements.

Unlike the GFC, the pandemic has seen a sharp fall in net migration combined with high unemployment numbers, which has continued to deal serious blows to the country’s residential sector.

The federal government has attempted to stimulate the sector with grants as part of its Home Builder scheme, however, property experts expect the market has another 10 per cent to fall this year.

While the federal government's Job Keeper scheme and mortgage repayment holidays are currently keeping mortgage arrears low, the numbers are set to top levels seen during the GFC.

PIPA chairman Peter Koulizos said while prices are expected to stand firm over the medium-term this time around, the best-performing locations following the pandemic would differ considerably based on new variables.

“The way that people work will likely change significantly post-pandemic, and this will have an impact on less traditional property investment locations,” Koulizos said.

“Lifestyles will undoubtedly change, which will make living outside the inner-city more appealing.”

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Article originally posted at: https://www.theurbandeveloper.com/articles/median-house-price-growth-post-gfc


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