House price correction predicted

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While only a small number of people are expecting house prices to fall over the next year, a new report suggests that an “eventual correction of prices” is likely.

In a study conducted by Datamonitor, it was revealed that a price correction would be the inevitable result of falling housing affordability.

"Given that house price growth has outstripped wage growth significantly over the last decades, this would have to entail either a significant fall in property prices or a sustained period of stagnant property prices," Datamonitor says.

The global consultant’s report on the mortgage market also reflected on the poor take-up of fixed rate loans, citing borrowers' disappointment with locking rates at peak times. 

The report stands in contrast to bank evidence that suggests evidence of a housing bubble in Australia is based on incomplete analyses of the market.

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