Fresh research from property analysers SQM Research show house prices in Melbourne and Sydney could fall by up to 4 per cent this year.
The forecast is somewhat downgraded from earlier SQM predictions and they say the Melbourne property market is overvalued by at least 45 per cent based on its comparison of nominal aggregate incomes to housing prices.
SQM say they expect this overvaluation in Melbourne and Sydney to wind down over an extended period of time.
Managing director at SQM Louis Christopher told the ABC that tighter lending standards are affecting the national housing market as a whole and it’s reducing demand for housing.
At the same time however, Mr Christopher said the overall economy is healthy with stable unemployment and strong population growth and as a result doubts we’ll see a general house price crash.
Mr Christopher explained to the ABC why the house markets in Melbourne and Sydney were having their forecasts downgraded.
“Leading indicators such as auction clearance rates, total aggregated property listings and asking prices suggest further deterioration in market conditions in recent weeks,” he said.