[Australia'smajorhousingmarketsareexpectedtomakesolidpricegainsoverthenexttwoyearsbuttwothingscouldpotentiallyslowpriceexpectations:thecoronavirusepidemicandapotentialmacroprudentialmeasuresaidaneconomist
Trent Wiltshire, an economist at Domain, said that the coronavirus epidemic in China could have an impact on the Australian economy, but only in the short term.
"It will hit the tourism and education sectors particularly hard. But it is possible that the epidemic is much more serious and is causing a significant economic slowdown in China, which would have a significant impact on the Australian economy, "he said.
In a recent statement to the House of Representatives Standing Committee on Economy, the Governor of the Reserve Bank of Australia, Philip Lowe, said that the coronavirus epidemic represents a new source of uncertainty.
"It is too early to say what the impact will be, but the SARS epidemic in 2003 could provide a guide. On this occasion, there was a sharp slowdown in production growth in China for a few months before a brutal rebound as the epidemic was brought under control and economic stimulus measures were introduced, "he said.
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Wiltshire said that one of the potential impacts of the coronavirus is an increase in the unemployment rate.
"A significantly higher unemployment rate would hit the housing market hard. It would have the greatest impact on the markets of Brisbane and Perth, as these markets are the most exposed to the Chinese economy," said Wiltshire. .
The other downside risk to house price forecasts is a potential measure taken by the Australian Prudential Regulation Authority (APRA) to mitigate the risk of a rapid increase in the value of housing.
In 2014 and 2017, APRA introduced a series of measures to slow down speculative lending, which resulted in lower property prices in many cities. However, Wiltshire said the chances of APRA doing the same in the next two years depended on speculation and the risk of lending practices.
Recent figures from the Australian Bureau of Statistics show that homeowners are leading the market recovery while investors are taking the back seat.
"It is possible that APRA will intervene to target real estate prices directly, even if the lending activity does not become speculative. But APRA would not consider intervene only if price growth accelerates well above 10% or 20% of annual growth in some of the cities, "said Wiltshire.
The latest Domain price forecasts indicate gains in all capitals over the next two years. The median combined price of housing in all capitals is expected to increase by 8% this year and up to 7% in 2021.
Sydney and Brisbane are on the verge of declaring the most robust growth. Melbourne is also expected to do well and should reach the median price of one million dollar homes by 2021.
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