PHOTO: There are many unknowns that could shape how the property market fares in a likely coronavirus-fuelled recession. Photo: TND
Economists believe it could take longer than the Coalition’s six-month coronavirus timeframe for the housing market to return to “business as usual”, as one grim prediction forecasts the potential for double -digit drops in property prices.
The claims come after Scott Morrison announced states and territories are working to limit the fallout of a coronavirus-fuelled recession in the rental market, with thousands of tenants in casual jobs expected to be laid off.
Meanwhile, the major banks have extended an olive branch to home loan customers who may struggle to maintain pace with their repayments.
The big four banks announced impacted customers could apply for a six-month ‘loan holiday’ on their mortgage.
AMP chief economist Dr Shane Oliver declared the government’s increasingly draconian social distancing policies would intensify plummeting transaction numbers.
But of greater concern is the threat of a recession lasting more than six months, which could see unemployment rise from the current 5.1 per cent to above 10 per cent.
“A deeper recession … risks tripping up the underlying vulnerability of the housing market around high prices and high debt levels. This could see a 20 per cent fall in prices,” Dr Oliver said.
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