The bottom line is we see more downside in Australian house prices. That is, of course, a broad generalisation and it depends on where you live.

Australian house prices have fallen for ten consecutive months driven mainly by declines in Sydney and Melbourne, which are coming off the back of a huge boom.

Nationwide, there is likely more downside to go with expectations of another 5% decline. We’ve seen a tightening in bank lending standards, an increase in the supply of units and poor affordability levels.

We’re also seeing investors and buyers saying, ‘well, I was trying to get in there for fear of missing out, now there’s no hurry because prices are coming down’.

All of those things are weighing on prices. At the same time some of the banks have raised mortgage interest rates; and, of course, there is speculation about a possible change of government to Labor, and talk of its plans to tighten or restrict negative gearing and the capital gains tax discount

But further property weakness will be dominated by Sydney and Melbourne.

Sydney property prices are up 70% over the five years to their peak last year while Melbourne property prices are up almost 60%.

Sydney and Melbourne have seen price declines of around 3% to 6% from those peaks and there is probably another 10% more to go, spread out over the next couple of years.

But if you’re in other cities around Australia it’s a somewhat different story because those markets didn’t have the boom. There’s still value to be had there in rental yields, which are still reasonably attractive.

Perth and Darwin have just come off the back of a huge bust, so, if anything, they’re getting close to the bottom. We’re probably going to see moderate growth over the next couple of years.

Other cities – Canberra, Adelaide, Brisbane and Hobart – again we see moderate growth in those cities.

So, while we are likely to see ongoing weakness at a national level over the next couple of years, it is clearly a tale of two nations, with the post-boom Sydney and Melbourne markets set to weaken, and other markets to post some growth.