Most car owners expect the value of their vehicles to fall over time, but used car prices have jumped 25 per cent over the past year due to lower global supply of new cars and people shunning public transport.
According to Datium Insights, data shows second-hand vehicle prices in August were up 25 per cent on the year.
CommSec chief economist Craig James said the strength of the used vehicle market was a surprise.
“But in the COVID-19 era … Aussies are more cautious about using public transport,” Mr James said on Wednesday.
“As a result, people are holding on to their vehicles and more people are looking to purchase an extra vehicle.
“So demand is up, supply is down and prices are up.”
Lower global vehicle production in the past six months had supported both new and used car prices, he said, while super-low interest rates were keeping car financing costs down.
Moody’s Analytics auto economist Michael Brisson said the price surge was an all-time record growth rate, breaking the previous record set in December 2009 when values rose by 20 per cent following the previous year’s global financial crisis.
“The rapid increase in prices for used vehicles due to COVID-19 is not only an Australian phenomenon – it is happening in developed countries across the world,” Mr Brisson said.
“The ute segment, which includes SUVs and light trucks, has increased by 32 per cent from the previous year, and the wholesale passenger-car market increased by 23 per cent during the same period.”
He predicted used vehicle prices would likely move sideways over the rest of the year.
“Price gains will slow as supply increases, with sellers seeking to take advantage of the high prices and COVID-19-related demand gets wrung out,” he said.
Originally published as How virus has changed used car market