Australian housing: how worried should we be?

Over the past three years Australian house prices have mostly moved sideways, rising or falling by around 10% per year. When prices started falling in 2018, we saw little reason to be concerned as housing affordability remained strong, unemployment was low and interest rates had room to fall. This setup the conditions for the Reserve Bank of Australia (RBA) to act, breathing life into the housing market. And then COVID-19 hit, bringing with it dramatic changes to our landscape. Unemployment is now at a 20-year high, immigration is non-existent and interest rates have hit the lower bound. So, just how worried should we be?