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The best performing areas in terms of property prices could change as remote working will make living outside the inner-city more popular, according to research.
The new research has reflected on the performance of the property market post-GFC to gauge how prices might fare during economic shocks such as COVID-19.
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The research and analysis, which is a joint initiative of the Property Investment Professionals of Australia (PIPA) and CoreLogic, has shown that property prices have remained resilient during turbulent times such as the global financial crisis (GFC).
Commenting on how the current economic crisis due to the coronavirus pandemic might impact property prices, PIPA Chairman Peter Koulizos said prices are expected to remain stable over the medium-term this time.
However, he predicted that the best performing areas could be very different this time compared with what has occurred in the past.
“The way that people work will likely change significantly post-pandemic and this will have an impact on less traditional property investment locations,” Mr Koulizos said.
“Lifestyles will undoubtedly change, which will make living outside the inner-city more appealing. If you don’t have to go to the CBD every day for work, because you can work from home, then you don’t have to live near it.”
The CoreLogic research analysed how property prices changed from December 2008 to December 2011, three years after the GFC.
The research found that capital city dwelling values had increased by up to 39 per cent over the three years from the end of December 2008 – when Australia was emerging from the GFC and government stimulus was increasing.
Mr Koulizos said the capital city results showed a mix of inner and outer-city suburbs, with six of the top performers in Sydney.
For example, dwelling values in Sydney’s Belmore in the Canterbury-Bankstown area increased by 32.6 per cent during this period, and 31.4 per cent in Cabramatta, Fairfield.
Values in Eastlakes rose by 31.3 per cent, Wiley Park jumped by 31.3 per cent, Chippendale rose by 31.0 per cent and Canley Vale rose by 30.5 per cent.
“The dominance of Sydney in the results shows that nobody rings the bell to tell you when the upward swing of a property cycle has started,” he said.
“When you do hear it, it’s too late because it’s already begun.
“I say this because most people believed that property prices in Sydney only started firming a year or so later – in 2012 – when it was already under way but perhaps masked by the continued economic uncertainty around the globe.”
Individual capital city results differed depending on the location, with Mr Koulizos stating that Melbourne’s best performers were inner areas, while Adelaide’s were those located in outer suburbs.
“The recovery in the property market was broad, varying from inner-city to outer-city suburbs,” Mr Koulizos said.
The number of first home buyers (FHB) also hit historic highs during that period of time, because of the federal government’s first home owner boost, he added.
“Certainly, first home buyers helped by boosting demand for new properties, whether they were located in urban regeneration or greenfield sites.”
CoreLogic head of research Tim Lawless said dwelling values in regional areas increased by up to 65 per cent over the same period.
Mining areas performed particularly strongly over this period, which Mr Lawless found unsurprising given the resources sectors “was firing on all cylinders 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,” he 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.”
[Related: ACT bucks national housing trend]
