According to the Corelogic Home Value Index results for May, Australian dwelling values have dropped by 33%. I’m just kidding of course, just a little stab to the CBA and news.com.au, for spreading it around last month.

Now, according to the actual Corelogic Home Value Index results, Australian dwelling values dropped by 0.4% in May, which is a pretty good result, much better than many economists and news outlets predicted. In all honesty, I also didn’t manage to get it quite right, as I predicted a tiny increase in May, but I was not far off either!

Let’s unpack the May results. From all capital cities Melbourne’s performance was down most with a 0.9% drop, all of that thanks to the units, as house prices held firm with zero drop in value. Sydney dropped by 0.4% and Brisbane by 0.1%.

Nationwide, house values dropped by 0.4% and given the circumstances that’s not a bad result, with the worst of Covid-19 behind us and definitely better than a 33% drop.

Corelogic head of research, Tim Lawless said “Considering the weak economic conditions associated with the pandemic, a fall of less than half a percent in housing values over the month shows the market has remained resilient to a material correction.”

With clearance rates up significantly across the country, in May and an estimated 18 .5% increase of sales activity, I daresay we’ll be looking at a pretty good next few months.

Why only a few months? Low interest rates, increased market confidence combined with the government stimulus packages that are currently in force. Should those packages be stopped entirely, we may see a negative impact on the housing market.

But do I believe the government will let that happen? Not at all, they’ll never let that happen.

I am confident that there will be significant government support for as long as is required to avoid a downturn. I don’t know what that will look like though, so therefore I’ll stick with a prediction for the next few months and in particular June. I am fairly certain that we’ll see a turn around in the house prices trend, meaning, either a drop of 0.3% or less, or, and I am going to say it again, a small increase of values, in particular in Melbourne, Sydney and Brisbane.