Growing fears RBA will have to cut rates to stop tumbling house prices

PHOTO: Sydney and Melbourne house prices could fall “in excess of 20 per cent” says analysts amid warnings of a broader economic impact.

The Reserve Bank could be cutting interest rates within months amid new warnings house prices in Sydney and Melbourne could fall by more than 20 per cent and pull down the national economy.

As Opposition Leader Bill Shorten said house prices across the country were already “crashing”, analysts from Morgan Stanley and Capital Economics both said the risk of an interest rate cut by the Reserve Bank was growing because of the risk posed by tumbling property prices.

Capital Economics economists Marcel Thieliant and Ben Udy said they expect prices to fall by an average of 15 per cent across the nation’s capital cities, making it the deepest and longest fall in prices on record.