It says likely lower interest rates, easier lending standards and a more settled post-election environment “should see national house prices rise by at least 5 per cent by the end of 2020”.

Sydney and Melbourne property prices could once again outperform.

Movements of as much as 10 per cent in Sydney and Melbourne “wouldn’t surprise us”, said the Macquarie report.

They cite positive factors such as:Predict Property

  • The government’s first home buyer deposit scheme
  • The relative shortage of new home listings in recent months. Sellers have kept properties off the market amid falling prices, and
  • Lower borrowing rates which are likely to be the most powerful factor according to Macquarie “We assume the RBA cuts by 50 basis points in coming months and most of that is passed through to actual mortgage rates.”
  • APRA wrote to lenders last month, saying that instead of the 7 per cent floor (which is 7.25 per cent in practice), they would be permitted to review and set their own minimum interest rate floor for use in assessments.

Here’s Macquarie’s forecast

The decline from the mid-2017 peak to the trough looks like being 10 per cent nationally, with Sydney’s peak to trough fall to be around 15 to 20 per cent and Melbourne’s close to 15 per cent.

If the peak-to-trough fall is 10 per cent it will be the biggest housing market fall in 40 years.

CoreLogic says there has been an improvement in the rate of decline. In April, Sydney dwelling values were down 0.7 per cent, compared with a fall of 1.8 per cent last December.