SYDNEY: Sydney and Melbourne's housing market could plunge as much as 20 percent over the next year, prominent Australian asset management firm Macquarie Group has warned on Wednesday.
With prices in Australia's two largest cities now dropping at an annualized rate of around 10 percent, Macquarie Securities economists Justin Fabo and Ric Deverell predicted in a morning note, there could still be more to come, reports Xinhua."We now expect national dwelling prices to fall for at least another 12 months, with a peak-to-trough correction of around 10 percent," they said.
"We expect prices in Sydney and Melbourne to fall by 15-20 percent." Macquarie bases their concerns on rising household debt, tighter lending conditions, lower demand for housing and a massive uptick in real estate listings. According to consultancy outfit SQM Research yesterday, in Melbourne alone, residential sale listings shot up 24.3 percent during the month of October.
"There's been a rampant acceleration in the amount of stock on the market in Melbourne just in the last few months," he said. "The market is turning and getting pretty nasty in Melbourne," SQM managing director Louis Christopher told Fairfax Media.
Despite the doom and gloom however, Fabo and Deverell believe a "disorderly housing price correction is unlikely, absent a major global economic downturn."
"We feel the decline under way is a housing correction rather than being the result of a macro correction," they said.