Housing market sentiment collapses as COVID-19 continues to drag down prices
A residential property survey has shown that faith in the Australian housing market has collapsed across the country.
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Housing market sentiment across Australia has collapsed with the COVID-19 economic downturn expected to push down property prices by almost 15 per cent.
The latest National Australia Bank residential property survey reveals housing market sentiment in the second quarter has dropped to negative 33 points, a 71 point fall compared with the first quarter that recorded an index of 38 points.
NAB’s survey indicated the biggest impacts were likely to be experienced in both Victoria and New South Wales, where house prices and rents are expected to fall in the next 12 months.
The major financial incumbent predicts property prices will fall between 10 to 15 per cent as a direct result of the coronavirus pandemic that caused the market to grind to a halt.
NAB said the price declines had been better than expected but capital city property markets were yet to reach the trough in the cycle.
“While the initial COVID-19 related restrictions on housing activity have eased, the economy has undergone a very large contraction, and while we appear to have passed the trough in activity, it will take time for the recovery to unfold,” NAB chief economist Alan Oster said in his report.
Regional breakdowns show Victoria has fared the worst, with the state sentiment falling by 95 points to an index of negative 50. New South Wales fell 84 point to an index of negative 84, while Queensland for the second quarter fell by 45 points to an index position of negative nine.
South Australia and Northern Territory both fell 33 points to an index of negative 26, the lowest level since the fourth quarter in 2015.
Western Australia fell 48 points to an index position of negative eight.
“While all forecasts are highly uncertain at this point and will be heavily dependent on virus outcomes, it is unlikely any part of the country will escape a deterioration in the labour market and the resulting fallout for households,” Mr Oster said.
“We expect that consumption growth will remain soft beyond a Q3 rebound as dwelling investment and business investment continue to fall.”
Originally published as Housing market sentiment collapses as COVID-19 continues to drag down prices