According to the comparison site Finder, the Reserve Bank of Australia (RBA) cash rate survey for this month, the majority of experts and economists (71%) agreed with ANZ Bank's prediction on the price shift.
Last month, ANZ Bank forecasted a 15-20% decrease from peak house prices in Sydney and Melbourne, and at the same time, stopped urging RBA to increase interest rates next year.
“I have not been expecting a rate hike next year and have been forecasting a 20% decline in Sydney and Melbourne property prices top to bottom,” said Dr Shane Oliver, head of investment strategy and economics and chief economist at AMP Capital.
Graham Cooke, insights manager at finder.com.au, said that economists’ predictions of slides in the property market have become more dramatic.
“ANZ’s suggested 15% drop would see $145,500 and $118,500 wiped off the average house price in Sydney and Melbourne, respectively," Cooke said.
“A 20% drop would see nearly $200,000 disappear from the equity of Sydney homeowners."
Young buyers who were able to pay a lower deposit through the help of parents who acted their guarantors could be at risk.
Cooke said that if projections do come true, recent purchasers who put down a 20% deposit could possibly be in the negative equity by the end of 2018.
Notably, positive sentiment for housing affordability has reached a year-long high, up from 46% last month to 54%.
However, a potential consequence of a falling market is a decrease in the building of new homes. Sixty-six percent of experts expect less construction, with 38% of experts predicting there’ll be at least a 10% drop in construction of new homes in 2019.
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