PHOTO: ANZ Property Focus
The COVID-19 crisis has seen trends in the housing market shift. There are offsetting forces, and the crosscurrents are highly uncertain. Currently, the market is supported – but this support may start to wane, particularly later this year.
Housing not immune to the downturn
Housing is a bellwether of the domestic economic cycle. Firm profits will be lower, partly reflecting a lack of international visitors and grim global outlook.
These factors will weigh on house prices, sales, home building and spending.
We are wary that a number of factors could weigh in time: a tip in the balance between demand and supply, rising unemployment, caution towards debt, and tighter credit conditions. We see house prices falling 5-10%, but the outlook is highly uncertain.
It will hinge on the global COVID-19 situation, economic conditions, migration flows, policy choices, and household attitudes.
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