A global bank warned that The Australian real estate market is set to crash much more severely than anywhere else in the world, as fears grow that the global economy is teetering on the brink of a global crash.
Unlike the last global recession in 2008, Australia’s real estate sector is expected to be hit harder, while the U.S. will emerge largely unscathed.
This is evident from the latest report published by Goldman Sachs earlier this month, titled “The housing downturn: A bigger deal down under and up north.‘.
The bank's research concluded that a major market crash would cause housing and apartment prices to plummet between now and the end of next year.
Australian real estate prices will plummet by a staggering 18% after the bubble bursts, if Goldman Sachs’ forecasts are correct.
New Zealand is in an even worse position according to the report, with forecasts that its real estate values will fall by 21%. Canada is also mentioned in the report, with a decline of 13%.
The Australian real estate market is already in decline following five consecutive months of interest rate hikes by the Reserve Bank.
According to the report, the other G10 countries will experience a much smaller decline in housing prices.
In France, the average price of real estate nationwide is expected to decline by just 6% by the end of 2023.
Things will be even better in the United Kingdom, where prices are expected to remain largely stable.
Meanwhile, in the U.S., real estate prices are expected to rise slightly, by 1.8%.
“Across the G10, home sales are falling rapidly and home price growth is slowing, with prices plummeting in places that saw the largest increases during the pandemic,” write Goldman Sachs researchers.
Indeed, in 2021, the Australian real estate market skyrocketed during the pandemic, with home prices rising nationwide by 25% within a year.
By comparison, the United States and the United Kingdom have never experienced such a boom and, as a result, will not face the downturn predicted for Australia.
Goldman Sachs' forecasts are largely in line with the estimates of Australian banks for the coming year.
Late last month, Westpac warned Australians of a 18% drop in Melbourne and Sydney by the end of next year.
However, in the rest of the country, the decline will be much more moderate, averaging around eight percent.
Last week, ANZ also released a similar forecast, with real estate prices in the capital cities expected to fall by 18% by the end of next year, before rising by 5% in late 2024.
