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Four of Australia’s capital cities have been recognised as some of the biggest winners in a global trend of pandemic-induced property price gains.
While global economies continue to take hits from the COVID-19 pandemic, the unprecedented scale of impact has generated a significant response from central banks, policymakers and businesses, with government-funded bailouts across the world’s top cities now valued at $17 trillion.
New analysis by Juwai IQI has shown that this has correlated to “significant home price gains” among three-quarters of the world’s “global” cities.
In fact, of the 21 global cities examined, 17 had significant positive changes in prices during the first year to 18 months of the pandemic, with an additional three showing minimal growth at less than 1 per cent year on year.
“The pandemic is undoubtedly both a tragedy and a manifold crisis, but for those who own residential property, it has also been a financial boon,” according to Juwai IQI co-founder and group executive chairman Georg Chmiel.
“The monetary and fiscal stimuli launched by governments has reduced the pandemic’s economic damage and helped inflate property markets, so many property owners benefited from significant capital gains during the first year to 18 months of the otherwise painful pandemic.”
Mr Chmiel said that the global property boom was largely stimulated by new demand trends, which was spurred by many people re-evaluating their living situation and therefore seeking properties that meet their new needs.
Inexpensive financing, wealth effect due to higher asset prices, increased savings and reduced non-housing spending also contributed to the positive pressure on prices, he added.
Sydney, Perth, Brisbane and Melbourne were all recognised as global cities in the analysis, and reported positive price growth through the pandemic.
Sydney took the eighth spot on the list with a 12 per cent increase in prices one year to 18 months into the pandemic, or a total value boost of $103,271.
Perth followed at ninth place with 9.7 per cent, then Brisbane at 11th place with 8.2 per cent and Melbourne at 14th place with 6.1 per cent.
“Only a limited number of suburbs [in these Australian cities] that have suffered from a lack of inbound students and immigration have bucked the rising trend,” Mr Chmiel noted.
According to him, the historically low home financing — with mortgage rates averaging 4 per cent in 2020 from 8 per cent in 2007 — ultimately pushed prices up across these Australian property markets.
The positive trend is set to continue, according to Mr Chmiel, who expects further growth on the back of pent-up demand, the return of students, the recovery of transaction levels and the current strength of the market.
He said: “That rapid price growth attracts buyers eager for a safe investment and afraid of missing out on an opportunity.
“Many buyers have not purchased during the pandemic, and some will make those transactions in relatively short order when borders reopen… When students begin returning in large numbers, a portion of them will be buying homes as well.
“The Australian market is already strong despite the lack of migration, and further upward price pressure will likely result as inbound migration resumes.”
Montreal in Canada topped the overall list of housing markets boosted amid COVID, with a value gain of 38.9 per cent achieved one year into the pandemic and an average value increase of $111,261 per property.
Other top 10 cities for COVID-induced price growth were Los Angeles (United States), Auckland (New Zealand), Toronto (Canada), Manchester (England), Vancouver (Canada), Shenzhen (China) and Lisbon (Portugal).
