Australia is set to be the world's worst-performing housing market in 2019 as it is likely to record a double-digit price drop over the period, according to a new report by investment company Citi.
Among the 60 economies covered by Citi’s report, 11 are at significant risk of notable home-price falls during the year, and only Australia might post year-on-year declines above 10%.
There is a 50% or more chance for the double-digit decline to happen in Australia, according to Citi. The report’s discouraging outlook was due to the weakening property markets of Sydney and Melbourne. New South Wales’ capital experienced a 10% drop in median house value in 2018. Melbourne's equivalent house prices, meanwhile, slid by 9.1% during the year, according to CoreLogic.
This downward trend is projected to continue this year due to the Australian Prudential Regulation Authority’s restriction on investor and interest-only home loans.
Credit rating agency Moody's Analytics had a similar forecast, reporting that Sydney's median house values would potentially fall by 3.3% in 2019, while prices in Melbourne are projected to decline by 6%.
Since peaking almost two years ago, Sydney's median real estate values have declined by 11.1%, surpassing the 9.6% drop between 1989 and 1991, which ended with a recession. The capital is also home to eight of Australia's 10 worst-performing metropolitan housing markets.
Citi’s study also found that these house-price declines, mainly in Sydney and Melbourne, would likely cut half a percentage point from the country’s gross domestic product this year.
The other economies predicted to experience declines in house prices in 2019 are Canada, New Zealand, South Korea, Sweden, Switzerland, Thailand and the United Kingdom.
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