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According to an analysis of ANZ’s Housing Search Index (HIS), interest in the property market waned considerably through the month of March, bucking a trend of continued growth since mid-2019.
Growth in search activity over the second half of 2019 and through the first quarter of 2020 coincided with a rebound in national home values, which, according to CoreLogic’s Hedonic Home Value Index, rose 8.4 per cent over the period.
However, ANZ Research noted that the recent decline in sentiment and the introduction of social distancing measures in the real-estate sector off the back of the COVID-19 outbreak has dampened interest in the housing market.
“The shutting down of auctions and open homes [is] very likely to put an end to that strong growth,” the research group noted.
“We suspect with these measures, many potential buyers and sellers will simply withdraw from the market until the virus is under control and social distancing measures are eased.”
As a result, ANZ Research has joined other market analysts in forecasting a decline in property prices over the coming months.
“As buyers and sellers dry up, we think properties that do trade through this shutdown period will see price falls, with only some sellers willing to enter such an uncertain market,” the research group added.
Pointing to previous trends recorded in its HIS, the group is anticipating that annual house price growth would “turn over” by June.
“This effectively indicates a fall in the level of house prices as early as this month,” the research group observed.
“That would be consistent with the flattening out in daily house prices, as well as the downturn in house price expectations.”
Moreover, unlike some observers, ANZ Research said broader weakness in economic conditions would thwart a V-shaped recovery in residential property prices once current restrictions are lifted.
“Once the social distancing measures are removed, we think it is unlikely prices will simply bounce back,” ANZ Research noted.
“Despite enormous fiscal support, unemployment is still expected to rise sharply through this period and is unlikely to fully recover for some years.”
ANZ Research conclude: “This, with a possible reassessment of debt appetite, will likely result in a slow recovery for house prices.”
The research group was previously expecting the unemployment rate to rise to as high as 13 per cent, but recently revealed it would revise its expectations in lieu of the federal government’s JobKeeper program.
[Related: Home-lending backdrop to slow slide in property prices]
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