Posted November 19, 2018 11:10:51The Australian housing market is on the verge of a historic collapse, with forecasters forecasting that prices will fall by at least a third in the coming months, with many economists predicting a return to the 1970s or 1980s when prices were lower.
The Australian Bureau of Statistics (ABS) forecast for the housing market in 2018, which was released on Wednesday, has already been revised down from its previous prediction of just over 3 per cent drop.
The bureau said the forecast for 2019, which is due out next week, will be closer to 3 per.5 per cent.
But it still predicts prices will decline by an average of 2.3 per cent per annum.
The ABS is forecasting the Australian economy will contract by 2 per cent in 2018 and by 2.6 per cent annually through 2019.
But the ABS is also forecasting the average price increase will be more than three times that.
That is because of changes to mortgage rules in 2017 that led to higher mortgage rates, making the market more competitive for investors, especially those with small or no deposits.
While the housing industry is booming, there is a growing concern that prices could fall further if housing affordability slows further.
The Federal Government has promised to help households with the cost of housing by lifting tax relief for those earning over $180,000.
But analysts have warned that will be a difficult sell given the impact on households of lower prices and the impact that a further reduction in tax relief will have on the Australian workforce.