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Melbourne and Sydney property are facing possible 30% price falls due to COVID-19

13D ago 0 Replies 29 Views
Louis Christopher, managing director of SQM Research, was interviewed by ABC’s Radio National where he warned that Melbourne and Sydney property are facing possible 30% price falls due to COVID-19:

“We are now recording falling dwelling prices as we speak… It’s Sydney and Melbourne that are the primary concerns. What’s triggering this housing downturn in Sydney and Melbourne, it’s not just the downturn in the economy but the specific closure of the international border, which has meant that the normal migration numbers that we have come through into Australia, we just aren’t getting at the moment. And those migrants generally come to Sydney and Melbourne first. And they take up the surplus stock that we build each year in the Sydney and Melbourne housing market. That’s not happening right now, so what we are seeing is surplus stock in the marketplace that is affecting the rental market. It’s affecting the sales market. And given the fact the border is going to be closed for some time, and then on top of that the forecast rise in unemployment, it’s a fair assumption that we are going to see further falls in dwelling prices going forward…
“The banks have been giving a moratorium on those borrowers that cannot meet repayments. The question of course, is can the banks keep that up? Or will they at some point be forced to call in loans? Our bet is that eventually they’ll have to start calling in loans or, on the other side of the ledger, they will have to significantly stop new lending. And potentially we are starting to see that already…

As we keep saying, the Australian property market is facing gale force headwinds in the form of:
Mass unemployment and falling incomes;
Collapsing immigration;
Rising dwelling supply and rental vacancies;
Falling rents; and
Tightening bank lending.


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