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.”
RELATED ARTICLES
About the author
About the author
Property
Australia’s mortgage knife‑fight: investors, first‑home buyers and the new rules of lender competition
The mortgage market is staying hot even as rate relief remains elusive, with investors and first‑home buyers chasing scarce stock and lenders fighting for share on price, speed and digital experienceRead more
Property
Breaking Australia’s three‑property ceiling: the finance‑first playbook for scalable portfolios
Most Australian investors don’t stall at three properties because they run out of ambition — they run out of borrowing capacity. The ceiling is a finance constraint disguised as an asset problem. The ...Read more
Property
Gen Z's secret weapon: Why their homebuying spree could flip Australia's housing market
A surprising share of younger Australians are preparing to buy despite affordability headwinds. One in three Gen Z Australians intend to purchase within a few years and 32 per cent say escaping rent ...Read more
Property
Tasmania’s pet-positive pivot: What landlords, BTR operators and insurers need to do now
Tasmania will soon require landlords to allow pets unless they can prove a valid reason to refuse. This is more than a tenancy tweak; it is a structural signal that the balance of power in rental ...Read more
Property
NSW underquoting crackdown: the compliance reset creating both cost and competitive edge
NSW is moving to sharply increase penalties for misleading price guides, including fines linked to agent commissions and maximum penalties up to $110,000. Behind the headlines sits a more ...Read more
Property
ANZ’s mortgage growth, profit slump: why volume without margin won’t pay the dividends
ANZ lifted home-lending volumes, yet profits fell under the weight of regulatory and restructuring costs—an object lesson in the futility of growth that doesn’t convert to margin and productivityRead more
Property
Rate pause, busy summer: where smart capital wins in Australia’s property market
With the Reserve Bank holding rates steady, the summer selling season arrives with rare predictability. Liquidity will lift, serviceability stops getting worse, and sentiment stabilises. The ...Read more
Property
The 2026 Suburb Thesis: A case study in turning trend lists into investable strategy
A new crop of ‘suburbs to watch’ is hitting headlines, but translating shortlist hype into bottom-line results requires more than a map and a mood. This case study shows how a disciplined, data-led ...Read more
Property
Australia’s mortgage knife‑fight: investors, first‑home buyers and the new rules of lender competition
The mortgage market is staying hot even as rate relief remains elusive, with investors and first‑home buyers chasing scarce stock and lenders fighting for share on price, speed and digital experienceRead more
Property
Breaking Australia’s three‑property ceiling: the finance‑first playbook for scalable portfolios
Most Australian investors don’t stall at three properties because they run out of ambition — they run out of borrowing capacity. The ceiling is a finance constraint disguised as an asset problem. The ...Read more
Property
Gen Z's secret weapon: Why their homebuying spree could flip Australia's housing market
A surprising share of younger Australians are preparing to buy despite affordability headwinds. One in three Gen Z Australians intend to purchase within a few years and 32 per cent say escaping rent ...Read more
Property
Tasmania’s pet-positive pivot: What landlords, BTR operators and insurers need to do now
Tasmania will soon require landlords to allow pets unless they can prove a valid reason to refuse. This is more than a tenancy tweak; it is a structural signal that the balance of power in rental ...Read more
Property
NSW underquoting crackdown: the compliance reset creating both cost and competitive edge
NSW is moving to sharply increase penalties for misleading price guides, including fines linked to agent commissions and maximum penalties up to $110,000. Behind the headlines sits a more ...Read more
Property
ANZ’s mortgage growth, profit slump: why volume without margin won’t pay the dividends
ANZ lifted home-lending volumes, yet profits fell under the weight of regulatory and restructuring costs—an object lesson in the futility of growth that doesn’t convert to margin and productivityRead more
Property
Rate pause, busy summer: where smart capital wins in Australia’s property market
With the Reserve Bank holding rates steady, the summer selling season arrives with rare predictability. Liquidity will lift, serviceability stops getting worse, and sentiment stabilises. The ...Read more
Property
The 2026 Suburb Thesis: A case study in turning trend lists into investable strategy
A new crop of ‘suburbs to watch’ is hitting headlines, but translating shortlist hype into bottom-line results requires more than a map and a mood. This case study shows how a disciplined, data-led ...Read more
