One of Australia’s big four banks has warned Melbourne homeowners to expect the market to dip 15 per cent by 2020.
It comes as Australian Bureau of Statistics data shows more affordably priced properties are starting to lose ground alongside their pricier neighbours.
National Australia Bank Group Economics has revised its predictions of a Melbourne property market fall from 10 per cent to 15 per cent, with prices to drop a further 7 per cent in 2019.
But despite the gloomy prediction most homeowners were still well ahead, NAB chief economist Alan Oster said.
“Go back four years to the last trough and house prices as of today are 45 per cent up,” Mr Oster said.
“We would still categorise this as an orderly correction.”
While tumbling house prices had largely been the domain of higher price brackets until now, new figures from the ABS have revealed one of the city’s more affordable brackets has started to soften.
The $650,000-$1.015 million price bracket was where price falls were most evident in the three months to the end of September.
“Falls in Sydney and Melbourne are no longer confined to the more expensive properties, with declines now being observed in the middle and lower segments of the market,” ABS chief economist Bruce Hockman said.
“Results are in line with market indicators, with auction clearance rates and sales volumes falling and days on market trending higher.”
However, industry experts believe the city’s most affordable houses are still its best performing.
Real Estate Institute of Victoria figures show a $14,000 (2.2 per cent) reduction in the most affordable quarter of Melbourne’s property market — homes below $640,000 — in the three months to September.
Losses were more pronounced in higher price brackets, the REIV data showed.