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Top economists turn more bearish on property prices

Tuesday July 03, 2018

Financial Review

Top economists are turning more bearish on the housing market at the same time as fund managers fear house price declines could trigger a "nasty cycle" in the economy and more downside for the Australian dollar.

The more downbeat expectations on housing emerged as economists scaled back their expectations for the first interest rate hike from the Reserve Bank of Australia since it cut rates to 1.5 per cent in August 2016.

"We have got more bearish on house prices over the past three months," ANZ's David Plank said.

ANZ is now expecting house prices to fall 4 per cent in calendar 2018 and another 2 per cent in calendar 2019, with larger declines expected for the Sydney and Melbourne markets. In March, ANZ had forecast that house prices would grow by just under 2 per cent through 2018.

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