Growth in house prices could resume as early as next year, one of the country’s largest lenders has revealed.

St George Bank Wednesday released a preliminary forecast of property price movements, projecting a sharp fall in values this year followed by a minor rise in 2021.

The bank projected a 7-10 per cent decline in national housing values this calendar year due to the weaker economy and job losses.

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Social distancing restrictions such as bans on public inspections and on-site auctions would also drag down the housing market, the financial group noted.

Price declines would be followed by a 2 per cent rise in prices in 2021 if the economy recovered later this year as anticipated.

A recovery in prices over 2021 would hinge on a gradual improvement in confidence as the economy turned around, according to a St George Economics report.

Low interest rates would underpin buyer demand, the report said.

“Stimulus measures will provide fuel for rapid housing price growth once the broader economic recovery begins,” it said.

St George Economics has joined a chorus of housing forecasts tipping a decline in values, but is one of the first lenders to put a number on how far prices will fall.

Up to this point, housing experts and lenders have been reluctant to issue specific price predictions due to the unprecedented scale of the coronavirus crisis.

St George acknowledged these limitations, saying in its Property Outlook report that the forecasts had “a greater degree of variability attached to them than usual”.

“There is significant uncertainty around how far (prices) can fall,” the group said.

The Reserve Bank of Australia has also noted how difficult the outlook is to predict.

Minutes from the latest board meeting revealed the RBA expected social distancing measures and weaker economic activity to drive a reduction in property turnover.

But the RBA added it “remained unclear how this would affect residential property prices”.

It comes as data from My Housing Market revealed new property listings have fallen nearly 50 per cent since the country went into lockdown.

My Housing Market economist Andrew Wilson said homeowners’ reluctance to sell so far has meant it was too early to tell what shape the market was in over the short-term.

He flagged the start of the next financial year as a coming watershed moment for the market because this was when many companies would make decisions about job cuts.

This included lenders, which have so far helped struggling mortgagees with incentives such as mortgage holidays to prevent arrears, Mr Wilson said.

“Banks are businesses too. There could come a point where they have to choose between supporting their customers or their staff,” he said.

“By July we will have a better idea if they can keep (incentives) going.”

New home sales are also down. Data from the Housing Industry Association showed March sales of new builds were 23.2 per cent lower than in February.

HIA economist Tim Reardon said it was too early to call the depth of the downturn, but April data would give a better indication of where the market was headed.

The COVID-19 crisis would cast a long shadow over the economy but the housing market could be insulated from a major crash, the St George Economics report said.

“There is unprecedented assistance which will cushion the downturn,” it said.