Australian home prices rise in March, but market seen cooling

(C) Reuters. Houses located in the Sydney suburb of Coogee can be seen along the coastline in Australia

SYDNEY (Reuters) – Australian home prices extended gains in March, although conditions are expected to cool as the coronavirus pandemic causes widespread economic disruption and hits household confidence.

Figures from consultancy CoreLogic on Wednesday showed home prices across Australia’s capital cities climbed 0.7% in March, the lowest monthly rise since the property market turned around in July last year. Home values are up 8.9% from a year ago.

Sydney clocked a monthly gain of 1.1%, taking its annual rise to 13%, while Melbourne was up 0.4% for the month and 12% higher on a year-on-year basis.

CoreLogic head of research Tim Lawless noted the country was moving into a period of “unprecedented uncertainty” which would drag the country’s economy into a recession for the first time in 30 years.

The number of coronavirus cases in Australia now exceeds 4,500 with 20 deaths. Authorities, worried about the spread of infection within the community, have rolled out increasingly restrictive measures to combat the virus.

“The housing market won’t be immune to a drop in sentiment and weaker economy, however the extent of the impact of dwelling values remains highly uncertain,” Lawless said.

He added that the number of residential property sales was expected to “fall dramatically” over coming months while restrictions on open home inspections and on-site auctions would compound the slowdown in activity.

However, housing values were likely to be insulated given the temporary nature of the crisis and the raft of policy stimulus measures undertaken by the government and the country’s central bank, Lawless said.