Housing prices are expected to fall 7% in the coming year, documents from the Reserve Bank of Australia (RBA) have revealed.
This was the central bank's baseline scenario for the COVID-19 pandemic, which could also cause prices to fall 2% in the upward scenario and up to 15% down in the down scenario.
The research paper was produced by the Department of Economic Analysis on May 18 and published Wednesday by the RBA.
"In our baseline and upward scenarios, a certain degree of patience from the banking sector is expected to mitigate the larger price declines caused by forced sales and financial stress," the department said in the document.
"In the downside scenario, by contrast, banks are not able to abstain to the same extent, which results in forced sales and a credit crunch."
Prices for Australian homes fell in May for the first time in almost a year as the economy struggled with the effects of the coronavirus crisis.
Although the closure of COVID-19 currently has a limited impact on housing prices, experts believe that the market will feel the real effects later this year when the stimulus packages are exhausted.
Data from the Australia Bank Association showed that almost 430,000 borrowers were on six-month payment leave, while government figures revealed that 2.9 million workers were receiving wage subsidies.
The RBA stated that the price forecasts for the three scenarios were taken from consumer confidence in the economy.
The central bank also predicted an increase in rental vacancy rates and a decrease in rents, as the number of "housing leases subject to rent discounts and deferrals" had considerably increases".
"Downward pressure on rents should weigh on house prices in the medium term," said RBA.
"Social distancing measures are expected to have an even greater effect on the number of real estate transactions than on prices; housing turnover is expected to decrease by 70% in the June quarter and remain low during the September quarter. "
Main suburbs:
rockville
,
collingwood
,
goulburn
,
Woolloongabba
,
windale
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