Sydney and Melbourne are the most vulnerable to sharp property price falls, according to HSBC, as the coronavirus turns off the migration tap

• HSBC has forecast property prices will fall nationally, and it says Sydney and Melbourne are the most vulnerable markets.

• It expects Sydney to fall between 5% to 15% and Melbourne to fall between 7% and 17% next year.

• Economists Paul Bloxham and Daniel Smith noted the capital cities were more exposed to reduced migration and unemployment as a result of COVID-19.

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Australia's economy has long been supported by a steady stream of migrants and its property market is no different.

As the country's population has swelled, growing demand has helped put a floor under property prices. However, with COVID-19 effectively turning off the migration tap for the first time in decades, it threatens to leave the country's biggest two markets without one of their key drivers: people.

"Although interest rates are at record lows, which should support housing prices, at the same time, the COVID-19 economic shock, stalled migration and rising unemployment are set to weigh on housing demand," HSBC economists Paul Bloxham and Daniel Smith wrote in a note.

While acknowledging "forecasting house prices is difficult at the best of times, they nonetheless presented the case for prices to fall over the next year and change.

Nationwide, HSBC expects prices to fall by anywhere between 2% and 12%, but with an even greater correction to occur in the country's two biggest capital cities. In Sydney, the pair forecast falls of between 5% and 15%, while they see Melbourne as even more vulnerable to a fall as great as 17% next year.

"We expect larger declines in housing prices in Sydney and Melbourne than in Australia's other cities, given greater reliance in these cities on migration and foreign students, which have stalled as a result of border closures," the two wrote.

Certainly, the immediate effect of closed borders has already shown up in the rental market, with rents falling particularly in those areas home to large numbers of Airbnbs and temporary visitors, like Bondi and central Melbourne.

Besides a proposed travel hub between Australia and New Zealand, the federal government has made it clear the country's borders will largely remain shut for the foreseeable future. With both Sydney and Melbourne more reliant on migration, international student markets and tourism, a prolonged isolation period could pose a greater threat to them, HSBC posits.

Its numbers aren't dissimilar to others proposed by other economists, including the Commonwealth Bank which has laid out a base case for 11% falls and even 32% under its worst-case scenario.

Similarly, SQM Research's Louis Christopher who noted a "mass exodus" from capital city CBDs has suggested 30% falls are within the realm of possibility. If unemployment gets as bad as Treasury expects, AMP Capital chief economist Shane Oliver says 20% falls are on the cards.

Evidence of a turning point has begun to emerge. The frequency of discounting among sellers has begun to climb, although limited volumes of sale have made it difficult to take the exact temperature of the market.

Again, there are plenty of variables to all those estimates. If the federal government can safely reopen the economy, stymie unemployment, the market may be saved from the worst of it.

While those are big 'ifs', there's plenty of nervous investors hoping they can do just that.