House Prices to Fall14 May 2020 by News Desk
Australia house prices could fall by up to 30 per cent if coronavirus restrictions are extended for another six months.
Property prices are set to fall by 10 per cent as a result of the recent economic lockdown but decline in values will be greater if the restrictions continue.
If a second wave of the virus occurs and restrictions are prolonged, property analysts predict a “major fall” in housing prices.
Price of houses and apartments could drop by up to 30 per cent over the next 12 months with the greatest price falls occurring in Sydney and Melbourne
The two cities will bear the brunt of the economic downturn as they have the most overvalued housing markets in the country.
Commonwealth Bank analysts believe housing markets in Sydney and Melbourne will be hardest hit due to their reliance on migration and population growth and the service-based nature of their economies.
Average Home Price (to March 2020)
In the year to March 2020 house prices had increased by 9 per cent on a year ago and prices of apartments had increased by 8.3 per cent, the strongest annual growth rate in over four years.
Over the March quarter, every capital city recorded a rise in housing values.
Sydney had the highest growth over the quarter with values up 3.9 per cent, followed by Melbourne at 2.9 per cent and Canberra at 1.7 per cent.
Nationally, the lowest capital city quarterly gain was in Darwin and Adelaide, each increasing 0.6 per cent, and a similar story occurred across the regional areas of each state, with values higher over the month and quarter.
But since the lockdown, the property market has gone into reverse with over 60 per cent of Australian real estate agents reporting a 50 per cent drop in buyer and seller enquiries.
Renting Costs Set To Fall
In coming months industry observers predict a significant rise in rental vacancies and a fall in rents.
There has already been a 5 per cent fall in rents in Sydney and a 2 per cent fall in Melbourne, according to SQM Research’s weekly data
With new dwellings being built to keep up with population growth each year, the drop in net migration will contribute to an expected surplus of 100,000 properties for rent. This surplus will drive down the cost of rents.
Continuing low interest rates and a range of government stimulus are expected to boost the Aussie economy back into growth in 2021 and beyond.
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