Why there could be a mini surge in house prices

“It could be even three months earlier. What’s the other possibility? The return of not only owner-occupiers, but investors in the market could be greater and they could be… a little mini surge in prices,” he said.

“Now, if I was giving a three-year forecast, I’d still be very cautious about price forecast in Sydney over a three-year time, whereas Brisbane, over a three-year period, I could be looking at 20 per cent price growth.”

The big picture

Over the last three to four months, Mr Mellor and BIS Oxford Economics have been analysing house prices, and he said that in the last 50 years, possibly the last 100 years, the declines have been the “worst ever” in nominal terms, but when adjusted for inflation in real terms, he claims there have been more severe declines.

“There’s been occasions before in the early to mid ’80s … there was a bigger price decline in real terms and what we’re seeing at the moment,” he said

“You’ve got to look at things in those sort of terms.”