Property analytics firm CoreLogic believes the pain for home owners in Australia’s biggest property markets will be over within the space of 12 months.
“Short-run forecast suggests that the Sydney marketplace will continue along its trajectory of decline but still seeing a continual moderation in the rate of decline before bottoming out around about the first half of 2020,” the group’s head of research, Tim Lawless, said.
This is in line with predictions from accounting giant KPMG, which forecast in January this year that house prices in both Sydney and Melbourne would plateau by year’s end.
“To sum up, conditions are probably going to remain weak for some time; we are probably through the worst of it. Credit availability will be the key factor to be watching in this marketplace, that’s what has really inspired this downturn,” Mr Lawless said.
However, he cautioned that his forecast does not factor in potential changes in the economy that may boost or further detract from buyer interest.
“This is simply a momentum-based forecast, so it does not factor in macro-economic conditions, lower interest rate, change of political policies around taxation, so anything could happen,” Mr Lawless said.
It is believed that first home buyers that were previously unable to afford a house will drive any market shift through the purchase of apartments in Sydney and Melbourne.
“Low mortgage rates, high population growth and improving affordability should help to offset the impact on activity from tight credit,” Mr Lawless said.
Despite the continuing price falls, properties in Sydney and Melbourne are still 9.1 and 8.2 times the average household income, respectively.
Adam Zuchetti is the editor of My Business, and has steered the publication’s editorial direction since early 2016.