“During an upswing, fewer properties are discounted and the opposite occurs during downturns.”

For example, when the level of discounting level was at 5.4 per cent in November 2019 Sydney prices rose by 6.6 per cent the following month.

On the other hand, when discounting rose to 9.5 per cent in November 2018 prices dropped by 9.1 per cent the following month.

Similarly, when discounting climbed to 7.8 per cent in February 2019 prices slipped by 10.8 per cent in March 2019.

Not all bad news

“It could fall by this amount, but I also wonder what a part of it was that initial response from vendors who just want to get their home sold in light of the lockdown,” Dr Powell said.

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“In that sense, it may not mean that prices may will fall as hard as what they did in the last downturn.”

In Adelaide, the proportion of discounted properties in April climbed to 8.3 per cent, more than double the level recorded 12 months ago.

In Brisbane, discounted listings rose to 7.3 per cent, Perth jumped to 6.8 per cent and Canberra to 8.1 per cent.

Hobart and Darwin recorded the lowest level of marked down listings at 2.2 per cent and 3.5 per cent respectively.

Dr Powell said while the levels of discounted listings had surged compared with a year ago, the latest reading showed a slight easing from March when discounting was at its peak.

“Price expectations clearly changed rapidly during this time, with vendors adjusting prices downwards to seek a timely sale in fear of what may be ahead,” she said.

“The rising portion of discounted homes aligned to the shutdown of non-essential services, the temporary ban on on-site auction gatherings and open inspections,” she said.

“I think that created extreme nervousness for everyone and that’s why the market has reacted so strongly in March.”

Average discounting ranged from 8.2 per cent in Darwin to 3.7 per cent in Melbourne.

In Sydney, vendors dropped their asking prices by 4.3 per cent on average, while Hobart vendors were willing to cut asking prices by 5.2 per cent.

Brisbane vendors slashed their prices by 4.3 per cent, Adelaide by 3.9 per cent and Canberra by 3.4 per cent.

Dr Powell said fewer vendors would be forced to drop their selling prices as the restrictions were lifted, but prices could come under pressure once the JobKeeper and mortgage holidays ended in September.

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“I think the risk of price fall is much greater once these two policies end,” she said.

“It depends a lot on how well the economy has rebounded by then and how many people were re-employed. So yes, the worst is still ahead of us.”

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