Select Page

In keeping with property price trends witnessed around the world, Australia’s Westpac forecasts the country’s property market will experience a fall due to the coronavirus pandemic but experience a boom in the period after. This is according to a September report released by the country’s second-biggest bank, which predicts that prices will fall by as much 5 percent until June 2021, with cities such as Melbourne (12 percent decline), Sydney (5 percent) and Brisbane (2 percent) feeling the effect. However, while the fall is seen as modest, Westpac expects the resurgence to reach as high 15 percent over the 2021-2023 period.

Westpac’s view is seen as more optimistic than other major lenders, some of whom expect the recovery to reach a level half of the one that Westpac forecasts. Others are far more pessimistic, maintaining that a double-digit decline in property prices can happen.

For property developers and other stakeholders these forecasts are essential, especially given the uncertainty around the pandemic. Michael Akkawi, a property developer with years of experience, is among many keeping a keen eye on property rates.

Four-Phase Approach

In reporting its forecasts, Westpac noted that the house prices trend would unfold in four phases. The first phase was the impact felt due to reduced economic activity early in 2020, just as the coronavirus was declared a pandemic and economies around the world halted. Various Australian cities were impacted differently, so that Melbourne experienced a 4.6 percent drop, while others such as Adelaide (-0.1 percent) and Brisbane (-0.9 percent) weathered this stage relatively better.

The second phase, expected to be felt throughout the end of 2020 and into the early months of 2021, will see prices remain relatively stable in most areas. Where increases occur, they will be modest, even though the city of Melbourne might still be experiencing price falls during this time.

Prices may drop again in the third phase, which is expected to run through 2021. In this stage, distressed sales are likely, mostly due to borrowers finding it difficult to service mortgage repayments.

In the final phase, a price increase is expected as the selling pressure will likely have run its course. This recovery stage will be propped up by a host of factors, including regulatory support, sustained low rates, fiscal assistance by federal and state governments, and an economic recovery reliant on the emergence of a coronavirus vaccine. According to Westpac, the recovery phase may take at least two years.