Sydney and Melbourne property markets won't crash in 2018: John McGrath

Neither the Sydney nor Melbourne property market is going to crash, veteran estate agent John McGrath has blogged.

"There are too many fundamentals holding prices up, such as the undersupply, high population growth largely due to migration, very low interest rates, low unemployment and a strong economy," he told investor readers on the Switzer website.

But he agreed the cities were "seeing prices paring back."

He indicated just how far prices will fall "is a hard question to answer with any real accuracy," but added it was reasonable to rely on history for an indication of how low prices might go.

He cited recent research showing Australia has had six previous episodes of declining housing prices since 1980, with the peak-to-trough range of 2.5 percent to 8 percent.

McGrath cited the buying urgency has gone, competition was weaker, "there’s more homes for sale and much less risk of paying a premium at auction.

"We’re getting back to normal market conditions," he said adding it was good because market corrections prevent bubbles.

"We want a period of consolidation now to cement in the significant price gains of the boom.... Sydney house prices were up 67% and Melbourne house prices were up 40% since mid-2012 when the growth cycle began.

"So, even if they fall by 8%-10% or more, most home owners shouldn’t be concerned by this. 

"At the end of the day, the gains made during the boom will far outweigh any price falls we experience now," he said.