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What are Australian house prices doing during the coronavirus plunge?

Real estate

The coronavirus continues to spread but what are Australian house prices doing while this is going on?

The Corelogic February 2020 Home Value Index Results were released this morning and give us a good picture of what happened across the country last month.

The house price movements

Nationally, in February house prices grew by another 1.1%. Sydney house prices went up 1.7% and Melbourne house prices grew 1.2%.

Over the month, the house prices of Hobart, Canberra and Brisbane went up 0.8%, 0.8% and 0.6% respectively. Perth and Adelaide house prices also grew by 0.3% and 0.1% respectively. The only city to register a decline was Darwin, which dropped a further 1.4% in a single month.

On an annual basis, Sydney and Melbourne moved back into double digit growth rates.

Melbourne, Brisbane, Adelaide, Hobart and Canberra are now at their all-time high prices. However, Sydney is still 3.7% below its all-time high whilst Perth and Darwin are 21% and 32.7% lower than their peak prices.

Regional areas saw an increase of house prices by 0.7%, slower than the capital cities but still saw good growth.

CoreLogic head of research Tim Lawless said: “The primary factors driving this rebound remain in place and include an extremely low cost of debt and improved borrowing capacity. However, considering the sluggish pace of household income growth, housing affordability is eroding rapidly which is likely to see some parts of the market become less active.”

What about share prices?

The monthly movement of house prices is not at the top of investor minds. The fallout of the coronavirus is causing the biggest effect. 

The share price of Commonwealth Bank of Australia (ASX: CBA) is down 3%.

The REA Group Limited (ASX: REA) share price is down 3.2% and the Domain Holdings Australia Ltd (ASX: DHG) share price is down 3.3%.

The share price of CSR Limited (ASX: CSR) is down 3.1%.

The share price of Brickworks Limited (ASX: BKW) is down 3.4%.

However, the Mcgrath Ltd (ASX: MEA) share price is up 1.8%, showing that there can be some positives in the selloff.

It will be interesting to see what happens with property over March and the next few months.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Brickworks and REA Group Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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