Last Updated: 2nd December, 2022

What is the impact of the coronavirus on the property market?

While the property market has fared well during past economic shocks, there is no clear cut evidence of how it will perform during a pandemic.

What is evident now is that property transactions have dropped.

Experts are commenting that this is a short-term event and that even if house prices fall, it will bounce back soon.

A lot of luxury / high-end properties can be purchased at a much lower price at the moment. This is likely due to the fall in the share market, many people not receiving bonuses or having their business affected by lockdowns.

In most cases, a downturn tends to affect higher-priced properties more than lower-priced properties.

  • Expensive and higher-end markets will be the worst hit.
  • Prices might suffer in cheaper, blue-collar suburbs where employees cannot perform jobs remotely or there are chances of unemployment.
  • Regional markets that do not depend on tourism and hospitality might not suffer as much.
  • Well-located homes in middle-ring suburbs might hold their values.

Government grants and schemes

  • Some states provide first home buyers with a grant between $10,000 and $20,000. The amount varies based on the state and certain property price thresholds.
  • First Home Loan Deposit Scheme is available for first home buyers who have at least a 5% deposit. You do not have to pay LMI, even when borrowing up to 95% of the property value.
  • Family Home Guarantee Scheme is available for single parents who have saved at least a 2% deposit. You do not have to be a first home buyer or pay LMI, even when borrowing up to 98% of the property value.
  • First home buyers may also be eligible for stamp duty concessions and exemptions.
Learn more about the available government grants and schemes for home buyers.

How quickly does the housing market react to a crisis?

The share market is forward-looking and tends to drop quickly when there is a crisis and then to recover before the economy does.

However the property market often takes longer to react to a crisis.

This is because the property market is mostly made up of home buyers not investors and so reacts to unemployment rather as opposed to the share market.

Will house prices drop due to coronavirus?

It is highly likely that house prices will drop due to COVID-19.

While the housing market was gaining momentum due to interest rate cuts and easing of credit conditions, the pandemic has changed the scenario.

Consumer confidence and job security are major purchasing decisions when choosing to buy a home.

Buyers might delay purchasing property due to the financial hardships they’ll face due to coronavirus like job loss, reduced hours, no bonus income, etc. This could induce household debt, so there could be a fall in demand over the coming months.

Furthermore, the ban on in-person inspections and auctions will create a short term hit on property prices.

Even with the emergency rate cuts and quantitative easing, house prices will not remain at their current values.

Experts are indicating that house prices will fall due to:

  • The uncertainty of borrowers as they don’t want to take out a home loan if they are not confident in making repayments. Their job and income might be in jeopardy due to the coronavirus.
  • Due to social distancing measures, there are fewer auctions and inspections, and property transactions have reduced. While prospective buyers and sellers are shifting online, the number of people viewing properties have reduced.
  • Auction clearance rates are in decline, meaning more homes remain unsold.
  • Recession is a big threat as there could be two negative quarters of GDP growth and there could be a rise in unemployment.

While the housing market has performed relatively better than the share market against negative economic shocks, the economic slowdown created by the coronavirus must be considered.

Unemployment and property prices

The higher unemployment gets in Australia, the higher the likelihood and magnitude of a drop in prices.

The announcement of the JobKeeper payment to employers of $1,500 per fortnight per employee is expected to reduce the effect of the crisis on unemployment and so may cause a smaller drop in prices than first anticipated.


JobKeeper will no longer be accepted as it ended on 28 March 2021. Lenders will not consider it for serviceability.

Should I buy a house even during the coronavirus pandemic?

The low interest rate environment will not last for a long time, and property prices will bounce back once the economy gains momentum.

Low interest rates mean lower home loan repayments, however, since banks are tightening their lending policies, it might be harder for you to secure a home loan.

If your job and income are stable and not in danger of being cut, then you might have a higher chance of home loan approval. It’s best to get pre-approved now as there will be a cascade of effects that the coronavirus will have on the economy and lenders.

Furthermore, you must be able to make repayments on your home loan and also the costs involved in purchasing a property.

We’ve also created a comprehensive guide for first home buyers to help them buy their first home.

Did you know some of our lenders are offering purchase cash backs for property buyers? This can help you offset some of the costs of purchasing a property and in some cases, pocket the difference.

What if I’m an expat?

Expats can take this opportunity to buy property in Australia, as the exchange rates are low.

A low exchange rate means less deposit required, and you have high borrowing power when converting your income to Australian dollars.

I’m already pre-approved. Will there be any problems?

Brokers and lenders have started reviewing pre-approved mortgages who are going through financial hardship due to the loss of jobs or reduced hours.

A lender is under no legal obligation to fund your loan, so even on the day of settlement, they can withdraw the approval if they want to. Many lenders are asking for a recent payslip or are doing some other kind of employment check before they advance the loan.

They are working in their customers’ best interest, to ensure that taking on a home loan during this time will not put a financial strain on their customers.

For these borrowers, the CEO of Mortgage and Finance Association Australia (MFAA) has stated that they’re working with the Australian Banking Association and consulting lenders to view the issue of “pre-settlement hardship.”

Can I still buy or sell property during the pandemic?

Yes, you can as there are no restrictions in place that will prevent you from either buying or selling a home.

The home buying process has changed, with real estate agents offering virtual tours and private inspections.

You can still sell your property by auction, as virtual auctions have become the new norm. These auctions operate the same way as traditional auctions, but buyers make their bid online.

If you have not exchanged contracts yet, then it might be best to delay moving house. If you’ve already exchanged contracts and are obliged to complete the transaction, then exercise the strict social distancing guidelines during the transaction.

If you’re a seller: