Survey Highlights:

Housing market sentiment collapsed in Q2, with NAB’s Residential Property Index falling to a survey low -33 points (+38 in Q1). All states turned down sharply, but the impact was biggest in VIC and NSW, where prices and rents are expected to fall most in the next 12 months. New and established housing markets are being supported by owner occupiers, but higher activity from foreign buyers was also reported in Q2, especially in new property markets in VIC. Employment security is now the overwhelming impediment for buyers of existing property, with new research also revealing the biggest impacts to the housing market going forward will likely come from rising unemployment, job uncertainty and consumer confidence, according to around 8 in 10 surveyed property experts.

The View From NAB:

We have not changed our view on property prices – we expect the impact of the COVID-19 downturn will see a decline in prices of around 10-15% from peak to trough. While prices have held up slightly better than expected, they have now declined for two consecutive months across the capitals and we expect this to continue for some time yet. This easing in prices in Sydney and Melbourne comes after a very strong period in growth from mid-2019 where prices troughed. While the initial COVID-19 related restrictions on housing activity have eased, the economy has undergone a very large contraction, and while we appear to have passed the trough in activity, it will take time for the recovery to unfold. The labour market fallout – and consequent impact on households – will continue to play out over an extended period, which will likely see ongoing government support.

For further information, please see the attached NAB Residential Property Survey Q2 2020