Under more typical circumstances, the Reserve Bank’s (RBA) decision to institute the second rate cut this month would likely have infused optimism into the Aussie housing market; RBA research has revealed there is an inverse relationship between cash rate changes and property price movements.

The rapid increase in the value of residential properties from June 2019 was in large part tied to the series of cash rate cuts made over the year.

However, according to CoreLogic analysis, the current situation of “extreme uncertainty and economic fragility” means housing market activity is unlikely to lift even with the historically low cost of debt.

Consumer confidence, which has been weak for months, is trending lower as the coronavirus pandemic stretches onward, and the possibility of a recession increases. In this context, consumers are wary of making significant financial decisions such as buying or selling a home.

Further, a weakening in labour markets could lead to a substantial rise in mortgage arrears and distressed properties entering the market.

Those positioned to benefit in the coming months are buyers who have the confidence and financial well-being to remain active in the housing market despite the broader context, with significant potential for good buying opportunities at competitive prices and at ultra-low interest rates.

Despite the escalating coronavirus crisis, this past week was the second busiest for auction activity this year with 2,539 homes taken to auction across the combined capital cities.

However, the preliminary auction clearance rate of 61.3% will revise down to below 60% for the first time since mid-2019.

Withdrawal rates also rose as vendors opted not to test the market and buyers lost confidence or chose to avoid public gatherings; CoreLogic predicts more vendors will choose to withdraw from the market until confidence and selling conditions improve.

The clearance rate fell this week, but remains stronger than this time last year when 1,667 homes were taken to auction and a clearance rate of 50.9% was recorded.

While it has become clear that transactional activity will be disrupted in the coming months, there is no evidence of reduced housing values to date.

How true this holds depends on how long it takes to not only contain the virus, but for sentiment to recover.