![The Adviser](https://res.cloudinary.com/momentum-media-group-pty-ltd/image/upload/c_fill,e_unsharp_mask:100,g_center,h_389,q_auto:best,w_798/v1657606059/The%20Adviser/basic/default_vvdbbx.webp)
Australia is likely to be spared the hammering experienced by the US and UK property markets but the domestic industry should brace for a fall in home values in 2009.
The median Australian house price managed to remain in positive territory in 2008 but Australian households have become decidedly pessimistic about the health of the market for the year ahead.
According to the MFAA/Bankwest Home Finance Index, released last week, almost 60 per cent of households believed there will be a decline in property values in the next quarter.
And it is hardly surprising that Australian borrowers are nervous about the local market considering the battering global property prices have taken. Values have tumbled over the past 12 months by around 18 and 10 per cent in the US and UK respectively, with further declines looking certain.
While the RBA has stressed that Australia does not face a housing crash resembling those in the UK or United States, many economists have forecast price declines.
Shane Oliver, chief economist at AMP, has long warned that Australia’s housing market is overpriced and in November predicted house prices falls of between 10 and 15 per cent in 2009.
A less bleak but still pessimistic ANZ December forecast highlighted between a zero and five per cent decline for the year ahead.
Head of research at Adviser Edge Louis Christopher told Mortgage Business that the shaky outlook for unemployment was a significant concern for the property market but he was confident Australia would avoid a house price crash.
“The federal government and Reserve Bank do not want to see a property market crash and will do everything they can to avoid one,” he said.
“And they still have plenty of ammo left to do so,” he said.
Economist and chief executive of Peach Home Loans Nicholas Gruen said that while some market segments would see price declines others would probably remain fairly stable.
“Very expensive house values could drop sharply – in fact [they] probably already have,” he told Mortgage Business.
According to Dr Gruen houses below the $1 million mark would be less exposed to price falls as long as the RBA continues to cut interest rates.