Melbourne faces 15 percent price falls by 2021: ANZ

The second wave of COVID-19 has prompted ANZ to forecast Melbourne faces a 15 per cent fall in home prices by next year.

It is the largest peak-to-trough decline ANZ predicted for an Australian capital.

ANZ Bank has maintained its forecast for national house prices to fall by 10 per cent from peak to trough but now expects smaller falls in Hobart, Brisbane, Adelaide, Perth and Canberra.

While all those cities are set to fall between 6 and 9 per cent, the bank revised its forecast to a 15 per cent drop in Melbourne house prices, a dip greater than its previous prediction of a 13 per cent fall.

It still predicts a 13 per cent fall in Sydney, bottoming out in the second half of 2021. 

Darwin is expected by ANZ to stay in the doldrums, being down nine per cent.

The bank expects Hobart to fall by eight per cent) and Brisbane by six per cent.

The bank estimates Melbourne house and unit prices have already fallen by 2.2 per cent between March and July

It labelled the decrease “slightly more modest than we expected”, given government support payments like JobKeeper, superannuation withdrawals and deferred mortgage repayments helped the market/.

ANZ senior economist Cherelle Murphy said a dramatic decline in demand for housing had hurt both the sales and rental sectors.

“You’re going to have a greater unemployment problem in Melbourne simply because of the lockdown, (so) demand is going to be diminished,” she said.

With the Stage 4 lockdown in early August, Victoria’s economy is likely to have contracted further since.

In the three months to the end of June, the ANZ Stateometer showed Victoria’s economy deteriorated sharply, mainly due to weakness in the labour market and consumer sectors.

The ANZ believes Victoria's economy will contract 5 per cent or by more than $22 billion this year after a flat 2019-20.