- The Australian housing market is at risk from the coronavirus recession Australia has now entered.
- A relatively short recession that sees unemployment rise to around 7.5% would likely only set prices back around 5% or so after which prices would bounce back.
- But a deeper recession with say 10% unemployment risks tripping up the underlying vulnerability of the housing market around high prices and high debt levels. This could see a 20% fall in prices.
- This is not our base case, but it highlights the need for the Government & the RBA to minimise the fallout from coronavirus shutdowns in terms of businesses and jobs.