• Australian property prices are again rebounding.
• CoreLogic data shows national values are rising again for the first time in five months as Sydney returns to growth.
• In fact, the only capital city to fall during October was Melbourne as it emerges belatedly from stage four restrictions.
• Visit Business Insider Australia’s homepage for more stories.

National prices are moving higher for the first time since COVID-19 sent them tumbling.

Values grew by 0.4% in October, according to CoreLogic, breaking a 5-month losing streak as Sydney returned to growth.

In fact, the only major capital to elude growth was Melbourne, having only just emerged from stage-four restrictions.

The country’s smallest capitals led the pack higher, with Darwin and Adelaide prices growing 1.2%, while Hobart and Canberra rose 1% each. Perth and Brisbane weren’t too much far behind, recording 0.6% and 0.5% growth apiece.

However, it was largely Sydney, as the largest property market in the country that helped the overall national market bounce.

Moving from negative to positive growth for the first time since April, prices in the Habour city rose by a slim 0.1%.

Melbourne, the lone exile, saw prices shrink by a further 0.2% in October — its smallest fall yet during the pandemic.

Both Melbourne and Sydney could begin rebounding strongly as the spring season kicks off, CoreLogic head of research Tim Lawless suggested.

“Sydney’s clearance rate breached the 70% mark in late October for the first time since early March, and auction volumes have been at similar levels as last year,” he said.

“Melbourne, which is normally the largest auction market, saw the number of auctions held rise from virtually nothing in September to around 600 auctions over the final week of October.”

Apartment prices could have room to fall

However, it could be that market dynamics could again be shifting. While it has been house prices that have taken the biggest battering during the pandemic, apartments could soon encounter their own reckoning.

“Almost two-thirds of Australian units are rented, and rental conditions have weakened, especially in the key inner city precincts of Melbourne and Sydney,” Lawless said. “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 underperform relative to houses over the medium term.”

Home buyers are flooding the market amid government stimulus

While investors have been shaken out of the market during the pandemic, it has been those previously on the sidelines who have taken advantage.

The latest ABS figures out on Monday show that lending to first home buyers is up by more than 46% year-on-year.

“Lending to owner‑occupiers is at record levels and a whopping 41% above where it was in May, which was the low point this year due to the COVID‑19 pandemic,” CBA economists Kristina Clifton and Belinda Allen said in a research note.

The two meanwhile said that while residential prices were expected to cope worse than they have as immigration pauses, unprecedented government intervention has played its part.

“This supply/demand imbalance will take some time to resolve but is currently being overwhelmed by government stimulus to assist the construction sector and home building activity,” they wrote.

While that may have consequences further down the road, for now the government is helping push prices higher.

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