Housing prices in Sydney and Melbourne are tipped to fall by as much as 4 per cent this year, according to the latest report from property analysis firm SQM Research.
This is a major reversal of its previously rosy forecast — that Australia’s two priciest cities would see their prices surge by 4 to 8 per cent.
Its new downgraded forecasts for five capital cities are;
- Sydney -4 to 0 per cent
- Melbourne -3 to 1 per cent
- Darwin -5 to 0 per cent
- Brisbane 0 to 3 per cent
- Canberra 1 to 4 per cent
But its forecast for Adelaide (0 to 4 per cent), Hobart (8 to 13 per cent) and Perth (1 to 4 per cent) remains unchanged.
SQM’s managing director and author of the report, Louis Christopher, said there were major indicators that lead to the change in direction.
“Leading indicators such as auction clearance rates, total aggregated property listings and asking prices suggest further deterioration in market conditions in recent weeks,” Mr Christopher said.
In particular, Sydney’s auction clearance rates have fallen to the low-to-mid 50 per cent range.
Mr Christopher said that “the clearance rate may have dropped further to below 50 per cent” in April.
“These are levels which, historically, have translated into price falls,” he said.
He observed similar trends in the Melbourne property market.
SQM previously forecast Sydney and Melbourne prices would surge in 2018, but now expects them to drop or remain flat (at best). (SQM Research)