PHOTO: As of August 31, 12% of the bank’s home loan borrowers and 16% of its small and medium enterprise customers were on a COVID-19 relief package

Australia’s economic crunch is not yet over as far as the property market is concerned, according to forecasting from the Bank of Queensland which sees house prices plummeting more than 20% and commercial property diving 30% in value by the end of next year.

While those figures indicate the bank’s worst-case scenario, The Australian has reported the non-major’s more moderate modelling has tipped a 75% chance house prices will fall 11% peak-to-trough, and commercial property will slump 15% by the close of 2021.

Notably, Bank of Queensland’s outlook goes against other lenders which have been revising their property market predictions upwards in recent weeks.

CBA has adjusted its expectations to house prices dipping 6% peak to trough, compared with its earlier call of a 10% drop; similarly, Westpac downgraded its initial 10% call to a 5% drop in house prices.

Also included in its worst-case prediction, Bank of Queensland has suggested Australia could see GDP contracting by 9% this year, resulting in a hike in unemployment of 12%. Its base-case scenario for 2020 is not much better, with the group expecting GDP to shrink by 6% and unemployment to hit 10%.