AUSTRALIA'S property market is on the verge of another downturn as new social distancing measures to stop the spread of the coronavirus threaten to scuttle auction activity, data showed on Monday.
Preliminary auction results showed the clearance rate slumped to 61.3% last weekend from above 70% in recent weeks. It was likely the figure would be revised lower to below 60% for the first time since mid-2019 as more data is collected, according to property consultancy CoreLogic.
In another worrying sign, the auction withdrawal rate, which was averaging around 5% across Australia's capital cities, jumped to just above 8% on Sunday.
"In all likelihood we will see more vendors choosing to withdraw from the market until confidence and selling conditions improve," CoreLogic said.
Economists are predicting a 10-15% fall in prices this year as activity slows and the unemployment rate rises making fewer people eligible for new loans to buy homes.
Westpac economist Matthew Hassan said auction rates were showing "a clear and fairly rapid cooling" which was consistent with "outright stalling" in price growth.
The slowdown comes as the housing market was recovering from a long downturn that ended in mid-2019.
The sector was one of the few bright spots in Australia's A$2 trillion economy at the start of the New Year with the country's housing stock valued at a hefty A$6.9 trillion ($4.50 trillion).
Policy measures are unlikely to prop up activity.
Australia's central bank cut interest rates to an all-time low of 0.25% and forayed into quantitative easing to ensure credit was cheaply available.
The government stepped in too, with a A$66.4 billion ($38.3 billion) fiscal stimulus measure on Sunday, on top of the previously announced A$17 billion to help small business and individuals hit by the coronavirus.
Still, economists expect Australia will slip into its first recession in nearly three decades this year while the unemployment rate could jump to as high as 7.5% from 5.1% now.
The number of infections across Australia surpassed 1,600 on Monday from less than 100 at the start of this month.
Australian states are gradually closing their borders to the rest of the country while gyms, cafes, pubs and restaurants were forced to down shutters from Monday.
Some companies are adopting video conferencing and other measures to get around disruptions caused by the virus epidemic.
Auctioneer Chris Scerri told Reuters his agency had created an online auction product that lets people bid remotely, ensuring that auctions can continue even with no one present.
Scerri sold a house on Saturday for an Australian couple who were unable to return from an overseas holiday due to travel restrictions. He set up online video conferencing so they could watch the auction.
"It's uncharted teritory. We haven't been here before, no one really knows what's going to happen," Scerri told Reuters by telephone.
"People will still want to transact, people will still want to sell. Agents and auctioneers just need to come up with creative ideas for that to happen." - REUTERS