Sydney median home prices are currently at $780,000, sitting 14.5% lower than in July 2017, adding to concerns the housing bubble has popped will send the economy into a recession and force the Reserve Bank of Australia (RBA) to slash interest rates below 1%.
Last week, the RBA slashed its growth forecasts as the housing market slowdown has led to a decline in household spending. Rate traders are pricing in several interest rate cuts this year after it decided against easing.
"Growth in the Australian economy has slowed and inflation remains low," the RBA said. "Subdued growth in household income and the adjustment in the housing market are affecting consumer spending and residential construction."
Suburbs like Liverpool, Wiley Park, Eastlakes, Bondi Beach, and Bondi are considered the most vulnerable housing markets to crash this year, reported Real Estate Institute of New South Wales (REINSW).
The analysis also indicated suburbs like Glebe, Parramatta, Fairfield, and Redfern would see further price declines.