House prices in Sydney to plummet by $60,000 and Melbourne trails closely behind

House prices in Sydney are expected to continue to fall by a further $60,000 by 2020, experts have warned.

The news confirms fears held by current homeowners, but makes way for a promising year ahead for buyers hunting for their next property, according to Finder’s RBA Cash Rate Survey. 

All of the countries’ largest cities, except for Hobart and Canberra, will see a decline in housing markets over the next few months, the experts said.   

The panel predicted that house prices could fall by 6.2 per cent in Sydney, lowering the median property cost to $872,242.  

Melbourne closely trails Sydney’s flailing market, as residents brace for a 6.5 per cent – or $48,947 – drop in housing prices to $701,053.  

Apartments would fare even worse, with a predicted decline of 7.7 per cent in Sydney and 7.6 per cent in Melbourne. 

Insights manager at Finder, Graham Cooke, said the cooling market could be an opportunity for first-time buyers to get a start building their property portfolio. 

‘With the highest median house and unit price in the country, it’s not surprising that Sydney is expected to be hit hardest by the property downturn,’ he said. 

‘If the predictions hold true, Melbourne and Sydney property still have another 6–8% to drop this year. This means $60,000 more knocked off the average property price in Sydney.’ 

While Sydney and Melbourne will take the biggest hits, others cities will also be affected by the slowing market. 

Brisbane and Perth will see less significant downturns in home prices – between 2.2 and 5.3 per cent. 

Those wanting to buy units in Brisbane may be in luck with the median price set to fall by $20,485 in 2019. 

Adelaide is forecast to see milder falls with residential prices expected to drop by between 0.8 per cent and 2.1 per cent.

Canberra, however, is defying the trend with house prices continuing to climb year on year and showing no signs of slowing.   

Also expected to see an increase in property prices is Hobart with house and unit prices climbing between 0.2 and 1.2 per cent.

Experts say for those looking to buy their first home, the continued fall in prices means it may be beneficial to wait – with potentially tens of thousands of dollars that could be saved.  

The findings by Finder’s RBA Cash Rate Survey comes after data released by real estate group CoreLogic found Australia’s housing market contagion had spread beyond Sydney and Melbourne to every mainland capital city.

CoreLogic revealed that while the pace of decline is slowing in Australia’s biggest cities, despite double-digit annual house price drops, more places had been infected.

‘While the pace of falls has slowed in March, the scope of the downturn has become more geographically widespread,’ the group’s head of research Tim Lawless said. 

CoreLogic 

The downturn began in 2017 as the Australian Prudential Regulation Authority cracked down on investor and interest-only loans, which caused investors to lose faith in real estate. 

The Reserve Bank of Australia is particularly worried about the effect falling house prices will have on the economy, with Governor Philip Lowe issuing a warning in March. 

‘The main domestic uncertainty continues to be the strength of household consumption in the context of weak growth in household income and falling housing prices in some cities,’ he said in a statement, accompanying the decision to leave interest rates on hold at 1.5 per cent.

Economists at Westpac and AMP Capital are expecting the central bank to cut interest rates twice in 2019, which would take the cash rate to a new record low of one per cent.

Weak wages growth and falling house prices, particularly in Sydney, have been blamed by the Reserve Bank on weaker sales of furniture, white goods and cars in New South Wales. 

Australia fell into a per capita recession in the September quarter for the time first since 2006.