Australian house prices are due to fall further by 5 per cent in 2019, according to Fitch Ratings, one of the world’s major credit rating agencies. 

Australian house prices have already dropped by 6.7 per cent since their peak, and will continue to do so until a predicted recovery in 2020. 

In their report, Fitch Ratings has predicted that the Australian house industry will be the worst performer out of the 24 countries, due to reduced affordability and restricted credit access. 

“Australian borrowers continue to be vulnerable to financial shocks, despite falling prices, as their very high household debt level (which is the highest in this report relative to GDP at about 120 per cent) is coupled with most variable interest rates,” the report said. 

Australia’s household debt-to-GDP ratio currently sits at 121 per cent, which is high compared to other countries. This is a big risk to Australia’s economy moving forward. 

Sydney and Melbourne have experienced a larger drop in prices with 11.1 per cent and 7.2 per cent respectively. 

“We expect price declines to continue at a similar pace in 2019 in Sydney and Melbourne, where larger falls have occurred,” the report said.

“Properties in possession will take longer to sell as home prices fall, so loans will remain delinquent for longer,” the report added. 

However, Fitch Ratings predicted that the house prices will stabilise in 2020 due to above-trend GDP growth and strong net migration.