Two analysts believe they have cracked the formula for correctly predicting changes in house prices in Australia, stating what they believe we will see happen in the market in the next couple of years.
Using two decades of data, a preliminary research paper under review for the Economic Record looks at ways in which property prices fluctuate, and shows that there will be a slight correction in prices in some cities across the next year, while other places will see plateauing in the same period.
Melbourne is likely to see the largest correction in prices, and although that sounds like it could be bad news, the 9.2 per cent fall that's being predicted between now and May 2016 could actually be good for long-term market health as it helps to make sales more fluid and makes the sector more accessible.
Other cities where we are likely to see falls across the next year will be the likes of Brisbane and Perth, where final sale values will drop by 8.1 per cent and 5.2 per cent respectively.
However, while some will see falls, other cities will be experiencing rising property prices in the same time period. According to the predictions, Adelaide, Hobart and Canberra are all likely to see modest price rises in the next year.
Meanwhile Sydney, which is the hottest property market in the country and has been for some time, will see the biggest increase, climbing by six per cent in the next ten months before plateauing somewhat. Again, while the rise will not be great news for buyers, the plateauing prices would at least show that the market has some long-term stability and will not suffer any sort of severe correction, which would damage it moving forward.
Earlier this week, Barclays said prices in the nation were, on average, 12 per cent too high, suggesting it could only be a good thing for them to see a slight fall in value.