Invest
How property prices are set to survive the COVID-19 pandemic
A better-than-expected outcome is expected for Australia’s housing market off the back of the pandemic, with predictions of market crashes unlikely, according to a senior economist.
How property prices are set to survive the COVID-19 pandemic
A better-than-expected outcome is expected for Australia’s housing market off the back of the pandemic, with predictions of market crashes unlikely, according to a senior economist.
AMP Capital’s chief economist, Dr Shane Oliver, now believes a 20 to 30 per cent fall in residential property prices is “unlikely” in the absence of a “second wave” of the coronavirus outbreak.
Earlier this week, property research group CoreLogic published its latest findings, which showed that national dwelling prices slipped by 0.4 of a percentage point in May — the first monthly decline since June 2019.
Five of Australia’s major capitals recorded month-on-month declines, triggering a cumulative fall of 0.5 of a percentage point, while combined regional market values were stable.
Despite it being the first fall in nearly a year, CoreLogic head of research Tim Lawless was optimistic, stating that weakness in the property market off the back of the COVID-19 crisis was “milder” than initially expected.
AMP Capital chief economist Shane Oliver has also revised his forecast to reflect a softer landing for the housing market.
Mr Oliver was initially projecting a peak-to-trough decline in dwelling values of up to 20 per cent. However, according to the economist, such a scenario is now improbable.
“Our worst-case scenario for a 20 per cent decline in prices and those of others seeing 30 per cent–plus falls are unlikely, thanks to support measures and the earlier reopening of the economy,” he said.
“To get these worst-case scenarios would require a ‘second wave’ of coronavirus cases [and] so a renewed shutdown or another down leg in the economy in response to a surge in bankruptcies.”
But Mr Oliver noted that a prolonged downturn in the property market is still on the cards amid rising unemployment and expectations of a deterioration in credit quality.
“[Further] falls in prices are still likely, as ‘true’ unemployment (to become clear after September) remains high for several years, government support measures and the bank payment holiday end after September, immigration falls and likely government measures boost housing construction,” he added.
As a result, Mr Oliver’s new base case is for national average prices to fall by between 5 and 10 per cent throughout 2020 and into 2021, with Australia’s largest capitals to bear the brunt of the downturn.
“Sydney and Melbourne are likely to see 10 per cent falls as they are more exposed to immigration and have higher debt levels, whereas Adelaide, Brisbane, Perth and Hobart are only likely to see small falls, and Canberra prices are likely to be flat,” he predicted.
“This may be seen as a reasonable outcome in terms of making housing more affordable but without posing a big threat to the economy — via a downwards spiral of falling prices and negative wealth effects on consumer spending — at the same time.”
About the author
About the author
Property
Retirement communities: a pivotal element in meeting Australia's housing targets
The Retirement Living Council (RLC) has recommended that retirement communities should be considered a vital part in the Australian Government's initiative to fulfill the Housing Australia Future Fund ...Read more
Property
Australians adjust financial strategies amid changing property market dynamics
The 2023 calendar year saw Australian borrowers acquiring a total of $300.9 billion in new loans for property purchases, marking a 12.7% decrease from the previous year. Read more
Property
Split home loans unlocking doors for Aussie buyers
Australians are teaming up to dive into the real estate market and seize the advantages of home ownership, with the trend of split home loans surging as family and friends unite to buy properties ...Read more
Property
Real estate investment: Spotting high-growth potentials
Investing in real estate has long been a favoured approach for Australians looking to grow their wealth. Read more
Property
Granny flats become Aussie families' cost-effective solution to soaring living costs
As the cost of living skyrockets, a forward-thinking trend is sweeping across Australia – granny flats are becoming a favoured living arrangement for older Aussies seeking comfort and proximity to ...Read more
Property
Homebuyers grapple with extended savings period amid affordability crisis
Gone are the days when an Australian dream home seemed just within reach. The path to homeownership in Australia has extended by at least two arduous years, as revealed by the latest insights from ...Read more
Property
Hybrid development unlocks new potential for NDIS housing in metro hotspots
In a ground-breaking strategy aimed at addressing the stark imbalance between the location of Specialist Disability Accommodation (SDA) developments and the actual areas of demand, Aligned Disability ...Read more
Property
Property prices boosted by housing policies: RBA
The central bank has outlined the “pervasive” impact that policy has on property. Read more
Property
Retirement communities: a pivotal element in meeting Australia's housing targets
The Retirement Living Council (RLC) has recommended that retirement communities should be considered a vital part in the Australian Government's initiative to fulfill the Housing Australia Future Fund ...Read more
Property
Australians adjust financial strategies amid changing property market dynamics
The 2023 calendar year saw Australian borrowers acquiring a total of $300.9 billion in new loans for property purchases, marking a 12.7% decrease from the previous year. Read more
Property
Split home loans unlocking doors for Aussie buyers
Australians are teaming up to dive into the real estate market and seize the advantages of home ownership, with the trend of split home loans surging as family and friends unite to buy properties ...Read more
Property
Real estate investment: Spotting high-growth potentials
Investing in real estate has long been a favoured approach for Australians looking to grow their wealth. Read more
Property
Granny flats become Aussie families' cost-effective solution to soaring living costs
As the cost of living skyrockets, a forward-thinking trend is sweeping across Australia – granny flats are becoming a favoured living arrangement for older Aussies seeking comfort and proximity to ...Read more
Property
Homebuyers grapple with extended savings period amid affordability crisis
Gone are the days when an Australian dream home seemed just within reach. The path to homeownership in Australia has extended by at least two arduous years, as revealed by the latest insights from ...Read more
Property
Hybrid development unlocks new potential for NDIS housing in metro hotspots
In a ground-breaking strategy aimed at addressing the stark imbalance between the location of Specialist Disability Accommodation (SDA) developments and the actual areas of demand, Aligned Disability ...Read more
Property
Property prices boosted by housing policies: RBA
The central bank has outlined the “pervasive” impact that policy has on property. Read more