Prices of housing in Sydney and Melbourne, two most popular markets during recent real estate boom in Australia, will fall by 12-16 percent from peak values, Bloomberg writes with the reference to economist of HSBC. Decline in prices has been observed for a while. They fell by 8% in Sydney and by 5% in Melbourne.

As a whole, prices will decline by 3-8% across the country in 2019, while this year they will drop by 2%.

We would like to remind that last year HSBC said that growing home prices are supported by stable demand and supply deficit and do not indicate any real estate market bubble. In May bank forecasted price decline by 3-5% in 2018 in Sydney and rise by 3% in Melbourne. However, not the situation has changed and the prices are falling faster than was expected.

Price drop was caused by the same factors that were reasons for property boom, but going in opposite direction. Supply deficit followed by construction boom, falling interest rates stabilized, high foreign demand weakened due to imposed restrictions, expectations of capital gains fell.

Last week, UBS warned about possible decline in prices by 30% in case of worst scenario.