Melbourne house prices will fall by 15 per cent, according to new predictions by ANZ’s economists.
The bank also forecasts tough times for Sydney owners, with housing set to drop by an estimated 13 per cent. It predicts the bottoming out of prices will likely occur in the second half of 2021.
The bank predicts a national price drop of 10 per cent, with the smaller cities expected to have less drastic falls in price: Hobart at 9 per cent, Brisbane by 6 per cent, Perth at 4 per cent, Adelaide 3 per cent, and Canberra 2 per cent.
These forecasts are sunnier than those made by ANZ in May.
“The decline in house prices over the past three months has been slightly more modest than we expected,” the report said.
“The government support payments to households, superannuation withdrawals and deferred mortgage repayments are all supporting the housing market.
“We anticipate prices will bottom out in the second half of 2021 as the labour market improves, but the recovery is likely to be relatively gradual given that we expect unemployment to stay above 8 per cent until end-2021.”
The bank notes a number of factors, led by declining incomes, will drive the downturn in prices.
“The deterioration in household income will be the biggest driver of weakness, but elevated uncertainty, much lower population growth and weak investor appetite given the slump in the rental market will all weigh on house prices,” the report said.
“While the deferral of home loan repayments and the likely move to more medium-term forbearance measures have (and will) help to prevent forced sales, lower demand and higher uncertainty will drive prices lower in the next year or so.”
