Melbourne's surprisingly firm price growth given low November turnover: Westpac

The Westpac economist Matthew Hassan has noted the broad-based strengthening in the November property prices as recorded by CoreLogic.

"Notably the reopening in Melbourne has finally seen prices turn in the one major market still recording declines a month ago – the 0.7% mth gain surprisingly firm given turnover was still low."

Melbourne's 0.7% gain was across all segments and building types although prices have generally been firmer for lower priced parts of the market.

Despite an apparent large overhang of stock in the inner city, unit prices also posted a solid rise in the month – Hassan adding "perhaps a caution that some of the gain may be running off expectations rather than conditions on the ground."

Hassan noted other markets consolidated on previous gains with Adelaide and Perth, the smaller capital cities and regional areas leading the way.

Turnover nationally largely consolidated on its Q3 'pop', he added.

The detail continues to show stark differences, activity in Melbourne only just moving off the extreme lows seen during lockdown but activity across other capital city markets still holding well above pre-COVID levels (and well above new listings suggesting these markets are likely to be very tight in coming months).

Sydney recorded a 0.4% gain to be up 0.3% on a three month basis.

Units remain a notable weak spot, with prices in this segment down 0.7% in the November month and 1.8% on a 3month basis, declines accelerating slightly, particularly at the top end of the market. 

He added Sydney houses at the lower end of the market have seen the most promising gains.

Prices rose 0.6% in Brisbane, 1.3% in Adelaide, and 1.1% in Perth.

The smaller capital city markets also recorded strong gains – Hobart up 1.4% and both Canberra and Darwin up 1.9%.

"All of these cities except Perth now have prices above their pre-COVID peaks."

Hassan concluded by noting "the housing market is now moving clear of COVID disruptions with recoveries at different stages across different jurisdictions but gaining momentum everywhere."

"While there will still be some weak areas, particularly in the Sydney and Melbourne unit markets, the resurgence in activity, the associated lift in market sentiment and more promising outlook for a vaccine remedy to emerge next year suggests broader momentum will remain well supported in 2021."

Wespatc have recently marked up our price forecasts with a 4% gain now expected in 2021 and a 10% rise in 2022, essentially bringing forward our forecast for a 15% surge that was previously expected to begin in mid-2021.