Why Australian House Prices Are Expected to Remain Stable Despite Economic Uncertainty

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April 24th, 2020

Understanding the Stability of House Prices Amid Economic Uncertainty

In the wake of global crises, economic forecasts often predict sharp downturns in various markets, including real estate. However, not all predictions align with these gloomy outlooks. Christopher Joye’s insightful analysis in his article, “House prices will not fall sharply,” challenges the prevailing pessimistic views about the Australian housing market. Let’s explore his key points and understand why he believes house prices are likely to remain stable.

The Contrarian Perspective

Joye takes a contrarian stance, arguing against the widely held belief that Australian house prices will plummet due to the Great Virus Crisis (GVC). He contends that house values are unlikely to fall significantly and, at worst, might decline by up to 5% over the next three to six months before resuming a robust cyclical boom. His confidence stems from his previous accurate predictions regarding the housing market’s trajectory.

Factors Supporting Market Stability

Several factors contribute to Joye’s optimistic outlook:

1. Central Bank Actions

Joye emphasises the importance of central banks’ swift intervention with quantitative easing and liquidity support, which has mitigated severe market failures and provided the necessary stimulus for market stability.

2. Lockdown and Economic Recovery

The early exit from lockdowns and initiatives like “Operation Kickstart” by the Australian government aim to minimise the impact on employment and mortgage arrears. This approach helps prevent a surge in forced property sales, stabilising house prices.

3. Interest Rate Elasticity

Australia’s housing market is highly sensitive to interest rate changes. The series of rate cuts by the Reserve Bank of Australia (RBA) since mid-2019 has significantly lowered mortgage rates, which, according to RBA’s modelling, should push house values up by 20-30%.

Current Market Observations

Joye notes that despite the lockdowns, house prices in cities like Sydney and Brisbane have continued to rise. Even in Melbourne, prices have remained stable. This resilience is partly due to vendors choosing to wait rather than sell at lower prices, anticipating a rebound once restrictions ease.

Potential Risks and Considerations

While Joye remains optimistic, he acknowledges potential risks that could derail the housing market’s stability, including:

  • A resurgence of the virus leading to extended lockdowns.
  • Escalating geopolitical tensions, particularly between China and the US.
  • Economic shocks that could trigger significant market downturns.

Critical Highlights

Christopher Joye’s analysis provides a comprehensive and contrarian perspective on the Australian housing market, highlighting the factors that support its resilience even amid global crises. While acknowledging the inherent uncertainties, his insights offer a balanced view that counters the prevailing narrative of an imminent sharp decline in house prices. For investors and homeowners, understanding these dynamics is crucial for making informed decisions in these uncertain times.


Joye, Christopher. (2020, April 24). “House prices will not fall sharply.” Australian Financial Review. URL: House prices will not fall sharply

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