The focus of this question is on the housing market in Melbourne.

In the bleakest scenario that the coronavirus outbreak persists till the end of the year, the following shocks are expected in the housing market.

• Homeowners, facing high household debts and job losses, will be forced into selling their properties.
• Prospective buyers face losses in income as unemployment is set to surge above 10%. Those working in travel, tourism, entertainment and hospitality will be hit the hardest due to the government's lockdown policies.

Required:

1. Considering the two shocks above, determine how the demand and supply of houses in Melbourne would change.
2. Clearly explain whysuch change(s) would occur.
3. Explain how the demand curve and the supply curve will shift as the result of the shocks above
4. Clearly explain how the equilibrium price and quantity of houses would change as a result.
5. In response to the economic meltdown caused by the coronavirus outbreak, suppose that banks allow homeowners to put their mortgage payment on hold for the rest of the year. This means homeowners, if they choose to do so, will not have to pay mortgage this year, and will pay more to catch up subsequently. How does this move affect the demand and supply of houses in Melbourne? Clearly explain.