"Unfortunately from here, it's going to go downhill quite significantly. The debate is, by how much."

Mr Oliver forecasts prices will fall by at least 5 per cent in 2020 with a “significant risk” they could fall by 20 per cent.

“The things that will help limit price declines are that supply will dry up to a large degree," he said.

"We’ve got the bank mortgage payment holiday for those who need it for six months, we’ve got wage subsidies which will allow those who qualify to keep earning a salary, and you have low interest rates, although that is not a big deal in this situation. All of these things help and will take the edge off a massive fall in prices.

“On the flip side, unemployment will still go up and it will take a long time to come down, well beyond the six-month period through which the bank payment holiday and wage subsidies apply.”

Unemployment could still rise to between 7.5 per cent and 10.5 per cent this year despite the Morrison government's $130 billion wage subsidy.


JPMorgan chief economist Sally Auld said a price fall in the order of 10 per cent could be expected.

“That would largely unwind that big run up in house prices that we saw through the back half of last year and the first couple of months of this year,” Ms Auld said.

"And then from there it really depends on the duration of the downturn and the sort of recovery we have afterwards."

Housing trend turns slowly

While the latest data showed national property values grew in March, there was a rapid deceleration in the rate of growth in the second half of the month.

Economist Stephen Koukoulas says the RBA's stimulus measures should reduce the need for home owners to panic sell. Daniel Munoz

"From about the 16th of March through to the end of March, the rate of growth virtually halved," said Tim Lawless, CoreLogic's head of research.

"The point to make on the fact that values are still rising is that it's very rare to see housing market trends turning extremely quickly, like equities markets do. They tend to be much more illiquid and have longer settlement periods and so forth."


Stephen Koukoulas, managing director at Market Economics, said the federal government's "hefty" stimulus measures, in particular the wage subsidy initiative, would help to put a floor under most parts of the economy, including the housing market.

"Even those people who are in financial stress won't be forced to have a panic sale and just take whatever price they can, which, of course, was one of the problems in the US in the GFC. People just selling their house at any price compounded the problem."

Nevertheless he said a 5 or 10 per cent drop was "in the ballpark of what we might see" as a decline in Australia-wide prices over the period of this crisis.

"Of course, if it lasts longer, the falls will be greater," Mr Koukoulas said.

"Certainly the volume of activity will shrink massively. Sellers who don't need to sell will probably just withdraw their property from the market and buyers who don't urgently need to buy or are having financial concerns won't be stepping up," Mr Koukoulas said.

The temporary nature of the crisis meant that most home owners would try to weather the storm, hoping for an eventual upside once the virus is contained and economic conditions improve, Mr Lawless added.

"Capital growth trends will be contingent on how long it takes to

contain the virus, and whether additional constraints on business or personal activity are introduced.

“Leniency from the banks for borrowers facing financial hardship should help to stymie the number of distressed properties hitting the market. Similarly, the massive federal and state government stimulus packages will help to support job retention and incomes."