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NAB predicts double-digit falls in Sydney and Melbourne house prices

One of Australia’s biggest banks is forecasting a double-digit plunge in Australian property prices because of coronavirus.

National Australia Bank predicted capital city house prices would fall by 10 to 15 per cent during the next 12 to 18 months, as unemployment hit levels unseen since the 1930s Great Depression.

The bank’s chief economist Alan Oster expected apartment values to plunge at an even steeper pace than houses in Sydney, Melbourne and Brisbane in particular.

National Australia Bank predicted capital city house prices would fall by 10 to 15 per cent during the next 12 to 18 months. It saw Sydney's median apartment price diving by 12.8 per cent by 2021. Pictured is a Coogee unit block on Anzac Day, 2020

National Australia Bank predicted capital city house prices would fall by 10 to 15 per cent during the next 12 to 18 months. It saw Sydney’s median apartment price diving by 12.8 per cent by 2021. Pictured is a Coogee unit block on Anzac Day, 2020

‘While both the depth and duration of the downturn underway remain uncertain – and will depend on the evolution of the spread of COVID-19 – we expect a sharp fall in economic activity in the near-term, followed by a rebound in growth but slower recovery in activity levels,’ he said.

‘We expect dwelling prices to fall by around 10 per cent this year and decline further in the first half of 2021 before levelling off. 

‘The declines will be led by Sydney and Melbourne – but the other cities will not be immune to rising unemployment and slower wage growth.’

Sydney’s median unit price was expected to plummet by 8.8 per cent in 2020 followed by another four per cent next year.

Going by CoreLogic data, that would see mid-point prices for an apartment dive by 12.8 per cent, or $99,576, to $678,364.

Melbourne was expected to take even more of a hit, with its median apartment price tipped to plummet this year by 10 per cent, or $58,820 to $529,383.

Melbourne was expected to take even more of a hit, with its median apartment price tipped to plummet this year by 10 per cent, or $58,820 to $529,383. By 2021, NAB predicted Melbourne unit prices would dive by 14 per cent, which would see a typical apartment lose $82,349, compared with its April 2020 price, to hit $505,855. Pictured are apartments at South Melbourne that featured on The Block in 2013

Melbourne was expected to take even more of a hit, with its median apartment price tipped to plummet this year by 10 per cent, or $58,820 to $529,383. By 2021, NAB predicted Melbourne unit prices would dive by 14 per cent, which would see a typical apartment lose $82,349, compared with its April 2020 price, to hit $505,855. Pictured are apartments at South Melbourne that featured on The Block in 2013

By 2021, NAB predicted Melbourne unit prices would dive by 14 per cent, which would see a typical apartment lose $82,349, compared with its April 2020 price, to hit $505,855. 

CORONAVIRUS CASES IN AUSTRALIA: 6,894

New South Wales: 3,044

Victoria: 1,454

Queensland: 1,045

Western Australia: 551

South Australia: 438

Tasmania: 226

Australian Capital Territory: 107

Northern Territory: 29

TOTAL CASES: 6,894

RECOVERED: 6,034

DEAD: 97

Brisbane unit prices were tipped to dive by 5.5 per cent in 2020 and by another 8.6 per cent next year.

A 14.1 per cent plunge by 2021 would see median apartment prices fall to just $333,918.

Adelaide was also in for a beating, with NAB expecting a 2.7 per cent drop in 2020 followed by a seven per cent fall in 2021.

A 9.7 per cent fall by next year would see median unit prices fall to $301,819. 

Before the onset of coronavirus, house prices in Sydney and Melbourne had recovered since mid-2019, following a two-year slump sparked by an Australian Prudential Regulation Authority crackdown on investor and interest-only loans. 

During the past year alone, Sydney’s median house price has surged 15.8 per cent to $1.026million while Melbourne’s equivalent values have soared 12.8 per cent to $818,806, CoreLogic figures for April showed. 

Brisbane unit prices were tipped to dive by 5.5 per cent in 2020 and by another 8.6 per cent next year. A 14.1 per cent plunge by 2021 would see median apartment prices fall to just $333,918. Pictured is Brisbane's city centre

Brisbane unit prices were tipped to dive by 5.5 per cent in 2020 and by another 8.6 per cent next year. A 14.1 per cent plunge by 2021 would see median apartment prices fall to just $333,918. Pictured is Brisbane’s city centre

‘There was evidence of a pre-COVID pickup in momentum. However, price growth has slowed more recently and activity in the established housing market has slowed sharply, ‘ NAB said.

Sydney’s auction clearance rate halved from 76.6 per cent in early March to 33.8 per cent in the week ending on April 19, a point acknowledged by NAB. 

‘Auction clearance rates have fallen to low levels and turnover has fallen away,’ it said.

In another ominous sign, NAB is expecting Australia’s jobless rate to surge from 5.2 per cent in March, before the shutdown of non-essential businesses, to 11.7 per cent by the end of June – a level unseen since the 1930s Great Depression. 

NAB is even gloomier than the Reserve Bank of Australia and Treasury, which are forecasting a 10 per cent unemployment rate by the middle of 2020, as COVID-19 measures caused the jobless level to hit the double digits for the first time since early 1994. 

Adelaide was also in for a beating, with NAB expecting a 2.7 per cent drop in 2020 followed by a seven per cent fall in 2021. A 9.7 per cent fall by next year would see median unit prices fall to $301,819. Pictured is an aerial view of Adelaide's city centre

Adelaide was also in for a beating, with NAB expecting a 2.7 per cent drop in 2020 followed by a seven per cent fall in 2021. A 9.7 per cent fall by next year would see median unit prices fall to $301,819. Pictured is an aerial view of Adelaide’s city centre

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Written by Angle News

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