The property market in Australia might not be as badly hit by COVID-19 as initially feared. The value of home loans fell 4.8 per cent in April, but economists were predicting falls double that.

The overall market is holding up. CoreLogic data shows capital city home prices have risen in the last 3 months except in Melbourne, which has seen a modest 1.3 per cent decline.

Bloomberg Intelligence analyst Mohsen Crofts argued yesterday there would still be an impact but it could be limited to no more than 5 per cent.

“Australian home prices have dipped only slightly since the pandemic began, as strong pent-up buyer demand and intractable sellers have kept discounting to a minimum,” he said.

“In the longer term price rises may be constrained as the outlook for wage growth remains challenging and the central bank has little room for further interest rate accomodation.”

Crofts said there could be a bigger impact if a second COVID-19 wave hit or unemployment persisted.

 

Small cap impact

Small caps in the property sector have overall gained 8 per cent in the last month and the majority are in the green.

Code Name Price (I) 1Y % Return 1M % Return Market Cap
CDP CARINDALE PROPERTY TRUST 4.1 -34 28 $290.5M
SSL SIETEL LTD 6.9 -4 25 $55.3M
KLO KINGSLAND GLOBAL LTD-CDI 0.075 -9 25 $30.4M
ACU ACUMENTIS GROUP LTD 0.1 -26 25 $15.6M
FRI FINBAR GROUP LTD 0.755 -9 22 $202.7M
AVJ AVJENNINGS LTD 0.45 -10 21 $184.8M
DVN DEVINE LTD 0.093 -38 16 $14.8M
AOF AUSTRALIAN UNITY OFFICE FUND 2.3 -17 16 $374.5M
MEA MCGRATH LTD 0.2 -29 14 $33.4M
AGJ AGRICULTURAL LAND TRUST 0.025 -22 14 $2.4M
GDF GARDA PROPERTY GROUP 1.02 -24 13 $189.6M
AU1 AGENCY GROUP AUSTRALIA LTD 0.045 -48 13 $13.5M
ECF ELANOR COMMERCIAL PROPERTY F 1.015 12 $206.4M
APW AIMS PROPERTY SECURITIES FUN 1.295 -9 11 $58.1M
SRV SERVCORP LTD 2.47 -20 9 $243.0M
AQR APN CONVENIENCE RETAIL REIT 3.53 27 8 $338.6M
VTH VITALHARVEST FREEHOLD TRUST 0.805 -11 6 $144.3M
ERF ELANOR RETAIL PROPERTY FUND 0.825 -28 5 $106.8M
BWR BLACKWALL PROPERTY TRUST 1.32 5 5 $200.5M
EGH EUREKA GROUP HOLDINGS LTD 0.32 29 5 $74.8M
APZ ASPEN GROUP 1.07 9 4 $121.3M
DGH DESANE GROUP HOLDINGS LTD 1.2 -5 4 $49.1M
SDG SUNLAND GROUP LTD 1.23 -27 4 $171.8M
MPX MUSTERA PROPERTY GROUP LTD 0.3 0 3 $29.9M
VP7 VELOCITY PROPERTY GROUP LTD 0.51 -51 2 $5.8M
TIA TIAN AN AUSTRALIA LTD 0.3 -29 0 $26.0M
LHM LAND & HOMES GROUP LTD 0.005 -64 0 $5.3M
HGL HUDSON INVESTMENT GROUP 0.35 -30 0 $20.8M
TGP 360 CAPITAL GROUP LTD 0.92 -9 -1 $202.0M
VOL VICTORY OFFICES LTD 0.4 -60 -4 $19.8M
URF US MASTERS RESIDENTIAL PROPE 0.31 -65 -7 $127.7M
AXI AXIOM PROPERTIES LTD 0.039 8 -7 $16.9M
BHL BOYUAN HOLDINGS LTD 0.08 -60 -33 $27.5M

There are some signs of underlying economic conditions in this ASX sector.

One example of the strength of refinanciers as opposed to new home buyers. On one hand real estate agent McGrath (ASX:MEA) has only gained 20 per cent since late March. On the other, mortgage brokers Mortgage Choice (ASX:MOC) and Australian Finance Group (ASX:AFG) have gained over 40 per cent in that time. The latter’s rise came despite a capital raising in May.

Property trusts such as Carindale (ASX:CDP) have gained, as well as Acumentis Group (ASX:ACU) which provides property valuation services.