ANZ bank is the latest to give its predictions for Australia’s housing market, tipping double-digit growth nationally driven by peak-to-trough falls in Sydney and Melbourne of 13%:
ANZ is now expecting dwelling prices to fall 10 per cent from the peak to trough across the capital cities.
House prices in Sydney, Melbourne and Hobart are poised to suffer the sharpest fall of 13 per cent each over the same period, as reduced population growth because of the border closures constrains demand.
ANZ notes the following headwinds in making its forecast:
Unemployment is tipped to rise to just under 10%, with significant cuts to both working hours and wages. Unemployment is expected to remain above 7% until 2022.
“This collapse in income will create significant uncertainty for households and leave many unwilling to commit to buying a home”.
Rental stock is predicted to rise sharply and rents fall, “with the rental market likely to be even harder hit than the new home market”.
Immigration will collapse, hitting demand especially hard in Sydney and Melbourne.
The ANZ’s forecast looks about right, with more downside risk if we get a second virus outbreak, leading to more shutdowns and deeper business/employment losses.
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness.
Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.
