"The surge of stock that has been on the market between 30 and 60 days indicates that those who listed in February clearly struggled to sell in March.

"It's certainly an indicator of a slowing market. This may reflect the start of a capital city housing market downturn due to the health and economic impact of COVID-19."

Even as older stock languished in the market, new listings continued to pour in.

We could have "a major event in the housing market where Sydney and Melbourne prices could fall by 30 per cent from the peak".

In Sydney, new listings rose 10.5 per cent during March, while Melbourne added 5.7 per cent.

Darwin recorded the largest increase in the number of homes on the market, with a 15.6 per cent jump, followed by 11 per cent in Canberra.

Nationally, new homes listed for sale rose by 3.7 per cent.


Mr Christopher said that while there was a slight lift in consumer confidence last week because of the government's JobKeeper scheme, the property market could suffer if the present social distancing restrictions continue for six months.

Restrictions set to strangle the market

"If restrictions are lifted sooner rather than later, we could expect a bounce in confidence and that would help the market, and we could potentially have a V-shaped recovery later in the year," he said.

"If, on the other hand, most of the restrictions were kept on for, say, a solid six months as a result of potentially a second wave of virus attack occurring, this would be a very bleak scenario for the housing market.

"This would be the worst-case scenario that's very much on the cards. You couldn't rule out a 30 per cent decline in property prices if restrictions were extended for six months.

"Because, in my view, Australia's economy would enter into a recession with a high probability of entering into a depression."

Mr Christopher said the Sydney and Melbourne markets were particularly vulnerable to such a scenario.

"Despite the market correction during 2018 and early 2019, these two markets remained overvalued and there was a lot of debt supporting these markets," he said.

"If that bleaker scenario pans out then we're going to have a major event in the housing market where Sydney and Melbourne prices could fall by 30 per cent from the peak."