The attached note updates our analysis of the impact of the Coronavirus shutdown on the Australian housing market.
The key points are as follows:
Australia capital city hoome prices fell by -0.5% in May, based on Core Logic data, with five of the eight capital cities seeing falls including Melbourne (-0.9%) and Sydney (-0.4%)
Significant policy support and the earlier reopening of the economy have made our worst-case scenario for a 20$ decline in average Australian house prices unlikely.
However, our base case is for home prices to fall around 5-10%, as “true” unemployment will remain high, government job and income support measures and the bank payment holiday end in September, immigration falls and new supply is likely to be boosted via government measures designed to support home building. Sydney and Melbourne are likely to be impacted the hardest, particularly given their greater exposure to immigration.
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