Housing: Where to from here?

PHOTO: STUFF Unemployment will be a big driver of the fortunes of the housing market.

Property owners are being warned that the coronavirus outbreak could hit close to home.

There are predictions that house prices could fall as much as 10 per cent in the next year. But the extent of the drop, and how quickly we might recover, depends on a few key drivers of the market.

Unemployment

If lots of people are out of work – or worried about becoming out of work – it will put the brakes on the housing market. Predictions are for unemployment to rise to anything up to 10 per cent.

Infometrics chief forecaster Gareth Kiernan said job losses were likely to be highest over the next six to 18 months.

“We know from past experience that the single biggest determinant in terms of driving the property market down is unemployment.”

People who feared for their job security would be less likely to buy, which created a cycle in which those who struggled and had to sell had to cut their prices to meet the market.