Sydney house prices could fall by 15 per cent, and Melbourne 17 per cent drop next year: HSBC

Sydney house prices could fall by 15 per cent, and Melbourne 17 per cent drop next year: HSBC
Sydney house prices could fall by 15 per cent, and Melbourne 17 per cent drop next year: HSBC

Sydney house prices could fall by as much as 15 per cent next year, while Melbourne could see a 17 per cent drop, according to an HSBC analysis.

Australian house prices could tumble 12 per cent in 2021, as a U-shaped recovery and COVID-19-related policies take their toll, Paul Bloxham, chief economist at HSBC, suggests.

However this year, the gains already accumulated before the pandemic will offset the decline in prices expected in the second half.

Nationally, prices could end 6 per cent higher, with Sydney up as much as 9 per cent and Melbourne as much as 7 per cent higher.

Bloxham predicts stalled migration and rising unemployment were likely to drive housing oversupply.

However Bloxham said low interest rates would work to make the housing market attractive to borrowers.

The overall impact, Mr Bloxham said, was that national housing prices will fall between 2 per cent and 12 per cent in the 2021 financial year.

The drop could even be deeper if the economic recovery was an “L” or “W” shape.

Next year Sydney prices could fall between 5 per cent to 15 per cent, with Melbourne dropping by 7 per cent to 17 per cent.

The analysis was by HSBC's chief economist, Paul Bloxham, and colleague Daniel Smith.

"Forecasting housing prices is difficult at the best of times, but at the moment it is particularly challenging," they wrote.

 "We expect larger declines in housing prices in Sydney and Melbourne than in Australia's other cities, given greater reliance in these cities on migration and foreign students, which have stalled as a result of border closures."

 

Tags: 
Paul Bloxham COVID-19

Comments

Be the first one to comment on this article
What would you like to say about this project?