It’s unfortunately looking like a pretty grim picture for Melbourne and Sydney’s property markets if the coronavirus crisis deepens.
SQM Research has forecast a possible 30 per cent fall in house prices by the end of 2020 if Melbourne fails to ‘flatten the curve’.
Managing director at SQM, Louis Christopher, told Savings.com that the best result from this point on would be no new coronavirus cases by the end of the month and a subsequent lift on the ban on auctions and open houses.
“If we are able to get back close to normal business by end of May, I certainly don’t think all restrictions will be lifted by that time, then I think confidence in the housing market is going to return,” he said.
“Assisted with all the stimulus announced and the economic damage relatively limited, it would mean a fall in housing prices recorded for the June quarter but a bounce back in the September and December quarters.”
But Mr Christopher said if things get worse and there’s a second wave of virus infections there could be a large 30 per cent correction to house prices.
“With the surging and sustained unemployment rate, the banks could start to get nervous on mortgages,” he told Savings.com.
“Potentially, after the six-month hiatus, banks may be backed into a corner where they are forced to repossession on defaulted housing loans.”
Mr Christopher also warned that homeowners may get spooked by falling prices in the June quarter and try to sell off to recoup losses.
It’s clear things are sitting on a knife-edge so stay home this Easter, stay healthy and let’s flatten the curve together.