Australian national house prices have dropped in September 2020. What will this mean for ASX shares?
What did the numbers share?
Overall, Australian house prices fell 0.1% in September 2020 and have dropped 1.1% over the last three months according to the CoreLogic home value index.
But, it was a mixed performance across the country.
The worst performance was in Melbourne because of COVID-19 impacts with a 0.9% decline over the month.
Sydney prices also dropped by 0.3%, though there’s expectations of a property rebound in the biggest city.
Brisbane house prices went up 0.5%, Adelaide prices grew 0.8%, Perth prices climbed 0.2%, Hobart prices increase 0.4% and Canberra prices also went up 0.4%.
There was one standout. The Darwin house prices climbed 1.6%.
CoreLogic’s head of research, Tim Lawless, said: “By far the weakest result across the capital cities, Melbourne housing values were down 0.9% in September. Since peaking in March, Melbourne values are down 5.5%. With restrictions starting to lift and private home inspections once again permitted, we expect to see activity lift in October.
“From a cyclical perspective, regional areas weren’t recording the same growth conditions pre-COVID, so home values in these markets are often more affordable, and don’t have a high base to fall from. Anecdotally we are also observing a transition of demand away from the cities towards the major regional centres, particularly those that are adjacent to the larger capitals where residents can commute back to the cities if required. Remote working arrangements are no doubt a factor in supporting demand in these markets, but lifestyle opportunities and a desire for lower density housing options are also playing a part.”
What’s the early reaction from ASX shares?
The Commonwealth Bank of Australia (ASX: CBA) share price is up 0.4%, the National Australia Bank Ltd (ASX: NAB) share price is up 0.2%, the Australia and New Zealand Banking Group (ASX: ANZ) share price is up 0.6% and the Westpac Banking Corp (ASX: WBC) share price is up 0.4%. The REA Group Limited (ASX: REA) share price is up 1.3%.
Stable house prices are good for the share market. But I’d rather buy reliable ASX dividend shares like Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) which I wrote a long article about here.
