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Six ways the pandemic reshaped Australia’s housing market

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Australia’s housing market has been reshaped dramatically by the pandemic.

The decision to close our cities at the start of the pandemic, to cut interest rates to lows never seen before and to pump the economy with stimulus had a huge impact on property prices.

It led to a new-found popularity for regional areas, and much stronger preferences for detached housing over units.

Government home-buying incentives also changed the composition of buyers, with more first-home buyers entering the market.

Eliza Owen, the head of research at CoreLogic, has outlined six of the major impacts on the Australian housing market two years on.

1. Australian property prices jumped by 25 per cent

CoreLogic change in home values

Early in the pandemic, between April and September 2020, housing values declined 2.1 per cent, but things quickly turned around.

The Reserve Bank cut rates to historic lows in November 2020 and said rates would not increase until 2024 at the earliest.

The economy was pumped with billions of dollars of stimulus, which saw household savings soar.

With financing so cheap, borrowers could access more credit.

According to CoreLogic’s Home Value Index, between April 2020 and February 2022, housing prices jumped by 24.6 per cent.

The total value of residential real estate soared from $7.2 trillion at the start of the pandemic to $9.8 trillion today.

The median dwelling value increased by $173,805, to be $728,034.

2. First-home buyer activity spiked

CoreLogic first home buyers

With interest rates so low, first-home buyers entered the market in large numbers (many with help from the bank of mum and dad).

From June 2020, first-home buyer activity surged following the introduction of the federal government’s HomeBuilder scheme, along with state-based grants and stamp duty concessions.

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