“As stimulus measures wind down and borrowers taking a repayment holiday face up to their debt, it’s logical to expect a rise in distressed properties coming onto the market,” CoreLogic head of research Tim Lawless said. Before Covid-19 hit, the Melbourne property market had only just started to recover from the sharpest contraction in living memory. In May, the bank predicted house prices in Sydney, Melbourne and Hobart to fall by 13 per cent over the same period.

Melbourne house prices also rose 0.1%, hinting at some stabilisation, though there will be understandable interest in coming weeks as market transaction volumes revive. In Sydney, prices contracted 0.5% over the month and 2.5% over the past four months. Lawless said the medium term outlook remains skewed to the downside, and that urgent sales are likely to become more common as fiscal support tapers from October and repayment holidays expiring at the end of March next year.

“Similarly, the recent concerns of a second wave of the virus and the potential for renewed border closures and stricter social distancing polices are likely to further push consumer sentiment down. Melbourne house prices are forecast to fall by 15 per cent, while Sydney prices could drop by 13 per cent from peak to trough before bottoming out in the second half of 2021.

Weaker house prices will weigh on dwellings construction, limiting the recovery in economic activity and GDP growth.

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“Regional markets may also be appealing for their relatively low density and lower price points.

“The extent to which this causes additional downwards pressure on home prices depends on how the Australian economy is travelling at that time.

While markets have so far proven more resilient than perhaps expected, there are some major obstacles ahead as government and mortgage support is withdrawn. Yes, if you're Bugatti, Suburban Canberra reveals its trove of mid-century gems, Meet the debutants storming up the Rich List, Former Young Rich Lister Craig Gore guilty of fraud. “Unlike their capital city counterparts, which usually receive 85% of net overseas migration, most regional markets have avoided the drop in demand caused by the pause in migration,” Lawless said. CoreLogic’s head of research, Tim Lawless, said housing markets have remained relatively resilient through the COVID period so far, adding that housing turnover has recovered quickly after its sharp fall in late March and April.

22 Sep 2020. “Through the COVID period to date, Melbourne home values have fallen by 4.6%.”. "Household incomes and jobs had suffered in Melbourne and the corresponding blow to confidence mean people are too uncertain to make that commitment to buy," Ms Emmett said.

Regional markets have shown more resilience to falling values over the past few months. Another area where the number of properties listed for sale is falling is many regional locations.

Having entered stage four restrictions on Sunday, that is unlikely to change, with its price falls already accelerating. Melbourne house prices dropped 1.4 per cent in July, accelerating to an annualised rate of 16.8 per cent, while Sydney lost 1 per cent, as the surge in COVID-19 cases reignited fear of a longer and deeper recession that could result in widespread forced selling.

Ben Udy, Capital Economics’ Australia & New Zealand economist, said home sales appear to have fully recovered from a nearly 22% fall in April to their lowest level since 1990, with estimated sales in June and July both above the average pace of sales in the six months prior to the outbreak. Indeed, auction clearance rates also picked-up in recent months, consistent with modest increases in house prices,” he said. However, the tougher lockdown in Melbourne would hit the city's housing market harder.

The nation's second-largest city, which was in stage 4 coronavirus lockdown for basically the entire month, saw prices slump 1.2 per cent in August. Victorian fitness businesses say they're COVID-ready, but need more space indoors. Combined with some properties either selling or being pulled from sale, SQM reported a 6.3 per cent drop in total real estate sale listings from July to August, with 293,053 properties listed for sale nationally last month. The Victorian capital's prices are now down 4.6 per cent since the coronavirus pandemic hit in March. New listings recovered at a gradual pace in July and are still around 10% below their average over the six months preceding the outbreak. But despite the gloomy prediction most homeowners were still … "I suspect that Melbourne house prices are on their way to fall somewhere between 10 and 20 per cent from the peak, of which it's already done about 3.5 per cent.

Looking ahead, Lawless expects to see the performance of different markets to splinter further, with each determined by how they transition out of lockdown. National Australia Bank Group Economics has revised its predictions of a Melbourne property market fall from 10 per cent to 15 per cent, with prices to drop a further 7 per cent in 2019. But it now tips smaller house price drops in Hobart, Brisbane, Adelaide, Perth and Canberra. “As a result we are still in a bit of a twilight zone as support measures help protect the property market and keep price falls gradual.”. ", Sign up to our new weekly Inside Property newsletter, Help using this website - Accessibility statement, Melbourne and Sydney has weakened the outlook for the market dramatically, the Victorian capital's latest virus-containment measures, Dion Hershan buys JB Hi-Fi boss' Toorak mansion for less than asking price, Pokie billionaire's $20m spread could break records, Anthony Deague buys James Calvert-Jones' Toorak home for $15m, European cities seize chance to reclaim housing, Post-COVID 'ding-donger' pushes Sydney home $10,000 over asking price, Rich Listers welcome Bombardier to Essendon Fields, Frasers, Altis to develop $1b western Sydney estate, Tony Albert's Aboriginal art turns cultural appropriation on its head, What this IT entrepreneur and peace crusader is reading, Complicated, unnecessary – and the latest must-have in luxury watches, Rich Listers win with boards that can say no, How to speak up about sexual harassment at work, Travellers look south to Tasmania and beyond, Is 0.1 of a second worth crowing about? As the country’s COVID-19 cases keep on climbing, Australian property prices continue to tumble. Houses meanwhile fell 5.1%, or around $40,000, over the same period, with just half of Melbourne properties selling at auction.