ANZ Research expects prices and construction to fall through the balance of 2020 and into 2021, before a modest recovery in late 2021.
" The collapse in demand in the face of the extremely uncertain outlook will drive prices lower over the next year or so.”
The deterioration in household income will be the biggest driver of weakness. Already, nearly a third of Australian households have reported a deterioration in their finances due to COVID-19. This collapse in income will create significant uncertainty for households and leave many unwilling to commit to buying or building a home.
While the deferral of home loan repayments will help prevent forced sales, the collapse in demand in the face of the extremely uncertain outlook will drive prices lower over the next year or so.
For house prices, ANZ Research expects a peak-to-trough decline of 10 per cent on average across the capital cities, with the sharpest falls in Sydney, Melbourne and Hobart. ANZ Research expects the Perth market to perform the best with a decline of just 2 per cent expected. Prices in Brisbane, Darwin, Adelaide and Canberra are all expected to fall solidly.