Home prices will tumble 32 per cent over a prolonged downturn period, the Commonwealth Bank has warned.
In Sydney, where the median house price is $889,992, that fall will wipe $284,798 from the median home value by March 2023.
And across Australia, where the median price is $555,739, a correction of this magnitude would wipe $177,837 from the median home value.
However, CommBank is also predicting 11 per cent of that fall will occur between 2020 and 2022.
The stark analysis came as CommBank announced its quarterly trading update for the March 2020 quarter.
The bank said the figures were due in part to higher unemployment and underemployment and pay cuts as well as due to current prices.
The country’s largest bank has also set aside $1.5 billion to cover losses caused by the recession, based on its base case that Australia will suffer a 6 per cent economic downturn over 2020.
The bank predicts unemployment will peak at 10 per cent but average 8 per cent .
But the bank believes a recovery will be rapid, with GDP surging 6 per cent in 2021 and another 3 per cent in 2022.
Customers’ billion-dollar mayday calls
CommBank revealed it has approved repayment deferrals on 144,000 home loans valued at $50 billion, and also approved deferrals for 71,000 business loans worth $15.2 billion.
And the bank has also received 1 million calls for assistance and 4 million visits to its website, as millions of Australians have been forced out of work, had their hours cut or suffered a pay cut.