House prices tipped to plummet 8 percent | Sunrise

Hold on to your hats.That is the direct quote from one of the world's biggest banks, which is warning this morning, house prices in Australia are set to plummet.HSBC warns the current falls are only just the beginning, with tumbles of up to 8 % expected by the end of next year.But the bank says it's not necessarily a green light for first home buyers.They say, quote, first home buyers and other home occupiers are unlikely to want to try to catch a falling knife.Let's bring in Amanda Rose, founding director of Western Sydney Women and Nick McCallum, Seven News reporter.

Good morning to both of you.Amanda, that's one side of things.The other side was some 20 -year -olds I was talking to last week who were saying, this is great news.We have wanted this for many years and the government's doing something we want to do.Maybe we'll be able to buy a house now.

It sounds like it's positive for people who want to buy because, look, let's face it, they were overpriced to begin with.They were ridiculous.I'm concerned for those who bought with a 5 per cent deposit and could potentially be negative equity right now and it's hurting them.Those who think there's an opportunity.There's also the danger here where banks aren't actually handing out home loans like they used to and they're cancelling pre approvals.Then you have people that are not wanting to buy even though house prices have dropped because unemployment has gone up.

small businesses are closing down, so the uncertainty of can I pay my mortgage ongoing is an issue.So the fact that the economic situation in Australia is uncertain overall, if those house prices, you know, they start dropping, great opportunity.However, they don't have the financial security to be able to buy, which means the people who have the cash will come in, swoop in and take those houses.

Yeah, Nick, this isn't something that's being talked about a lot.banks lending less to people because of the uncertainty and because of the change in lending conditions.

Well, from a layman's point of view, I'm certainly no economist, but it just appears the problem at the moment is uncertainty and confusion.Now, the government must have realised such dramatic changes would create uncertainty and confusion, particularly when they said they wouldn't do it in the first place.As you mentioned, house prices are meant to come down or expected to come down by 8 per cent over the next 18 months.At the same time, banks are talking about interest rates going going up.So it's a tug of war.It doesn't matter whether you're a young buyer or you're an investor, you're just totally confused about what to do.

And there's no reason why this should have happened.It should have been a lot clearer, unfortunately, at the moment The economists and the politicians are at each other's throat.They're both telling us different things and it creates this uncertainty and confusion and it's no wonder that mortgage brokers are reporting a 10 per cent decline in loan applications.I think everyone at the moment needs to take a chill pill.It's going to take a while for it all to sort out.Absolutely, people should take time, wait for a few months, hopefully things will settle down.

Yeah, if you're a first homeowner or you know someone, tell us what their sentiment is because this was aimed at them, this is what the government is trying to do.