The end of the housing downturn might already be close at hand, with prices likely to reach the bottom later this year, AMP Capital chief economist Shane Oliver said.
Oliver said the election results, the central bank's indication of a rate cut, and the banking regulator's proposal to ease lending rules might cause house prices to bottom out earlier than initially predicted.
He said capital city average prices might likely have a top-to-bottom fall of 12%, from a previous assumption of 15%. Currently, prices have already fallen by 10% since their peak in September 2017.
"However, given still-high house prices and poor affordability, still very high debt levels, tighter lending standards, and rising unemployment, a quick return to boom-time conditions is most unlikely," he told AAP.
In a previous Your Mortgage report, SQM Research chief executive Louis Christopher said the recent market developments could spur a turnaround in two of the most affected markets — Sydney and Melbourne.
"The expectation is that we will bottom out soon in Sydney, around the September quarter, with prices turning positive by the end of the year. It may even end up with an unwelcome new boom in Sydney, but there are a lot of 'ifs' still to play out," he said.
HSBC's chief economist Paul Bloxham, however, believes Melbourne could achieve a quicker recovery than Sydney.
"In contrast, Sydney has got a lot of supply coming on stream in the apartment market, so that might take longer for it to work through," he said.
Previously, AMP Capital predicted the cities to record a peak-to-bottom fall of 25% — now, it expects a 19% fall in Sydney and a 15% decline in Melbourne.