Financial analytics firm KPMG has forecast that home prices in Sydney and Melbourne will bottom out in mid-2021.
The firm has predicted that from the start of Sydney’s downturn in 2017 to its predicted end, there will be a 12.9 percent drop in prices. Melbourne will see less of a drop, with a 4.5 percent drop predicted for the same period.
According to KPMG, the reasoning behind Sydney’s significantly bigger drop is due to falling interest from investors, who make up a significant amount of home purchases in NSW.
KPMG chief economist Brendan Rynne says tight lending policies have largely driven the decline of prices thus far, although these may relent in the coming months.
KPMG has also predicted that should Labor win the upcoming federal election, the party’s proposed changes to property taxes including negative gearing will not have a major impact on the market.