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S & P prices fell 10% in Australia and even more in Sydney

2019-nCoV Special
Source: xkb.com.au
[Economic News]     31 Jul 2020
According to the S & P global rating (S&P Global Ratings), Melbourne's house prices will fall the most in the next 12 months as demand falls due to a second shutdown and a lack of international migration.
S & P prices fell 10% in Australia and even more in Sydney

 

According to the S & P global rating (S&P Global Ratings), Melbourne's house prices will fall the most in the next 12 months as demand falls due to a second shutdown and a lack of international migration.

Home prices are expected to fall by about 10% nationwide from the start of the new crown pneumonia pandemic, the credit rating agency said, until the market bottomed out, which is likely to occur around mid-2021.

But Melbourne's house prices are likely to fall more sharply, mainly because of a sharp drop in population growth and the loss of jobs.

"We think the market in Sydney and Melbourne could be down more than 10%, but Melbourne is still weaker because of house slump in population growth ," said Anthony Walker, head of the S & P's global credit rating department. "

Over the past 15 years, Melbourne's population has grown at an annual rate of about 1.6 per cent. However, only 0.6 per cent growth is now expected next year, which is 1 per cent lower than the growth rate of the past 100 years. "

"This is the lowest rate of population growth since 1917, so the demand for housing from immigrants is about to fall, and the demand for the population already in the country is falling due to employment conditions. "

While retention salary subsidies (JobKeeper) and "holidays" to postpone mortgage payments are currently keeping mortgage defaults low, s & p says the numbers will be higher than they were seen during the global financial crisis.

'We expect that many borrowers will still feel pressure to repay loans when relief and government support are over ,'said Erin Kitson, S & P's head of financial structure ratings.

"COVID-19 we expect that debt repayment during the epidemic will likely be higher than the 1.69 per cent peak reached during the global financial crisis, as unemployment is expected to be around 7.5 per cent. "

If rents continue to fall, investors may find it difficult to refinance their loans. "

As the second closure weakens the economic, she said, the state's mortgage arrears could rise.

"We expect the longer-term territories and states on the road to economic recovery, such as Virginia, to increase their mortgage arrears as they finally emerge from the epidemic, which is likely to occur around the first quarter of 2021. "

"Compared with the rest of Australia, we expect the second round of the state's closure to lead to more arrears the rest make better progress on the road to economic recovery. "

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