Realestate.com.au chief economist Nerida Conisbee said tighter lending standards and negative sentiment was blamed for the lower house prices, but she expected the low unemployment rate to ride out the downturn and resist a crash altogether.
Prices plummet when people lose their jobs and are forced to sell their homes - as was the case during the global financial crisis, she said.
"We're not seeing the big jumps in listings that are typical of a price crash," Conisbee told news.com.au. "We're definitely not seeing a 30-year price crash."
"The economic conditions of Australia are actually OK and should provide a buffer for how far prices fall."
Conisbee says the impact of negative gearing being abolished by a likely Labor Government differs as to which side of politics is constructing the economic modelling.
But she is certain it will weigh on the market one way or another.
"If you take that away and you have fewer people investing in property, then it will lead to a hit on pricing," she says.
"New investors to property do rely on it, and ultimately new investors to property is what will control the rental housing supply."
As financial institutions were put under the microscope during the royal commission, the banks applied tighter lending standards.
But the Australian Prudential Regulation Authority (APRA) winding back the cap on interest-only loans in December was the first sign it will get easier to borrow, Ms Conisbee said.
"One of the biggest drivers of these price falls is the fact the banks really started to clamp down on the amount they would lend," she said.
"If anything, the sign from APRA is they think the risks are over and the royal commission didn't have a huge focus on home loans and risky lending."
SYDNEY
Although Sydney retains the highest priced suburbs - with a $955,000 median house price - many are falling greater than anywhere else in Australia, with middle priced suburbs suffering the most and expensive suburbs holding up well.
Manly and Paddington are now some of the highest views per listing in NSW and are also clocking moderate price growth.
Prices have fallen 6.7 per cent in Sydney from the peak and there is the potential for another 5 per cent fall in the first half of the year.
MELBOURNE
Melbourne's performance is certainly a lot stronger than Sydney and while it's been hit by the same finance restrictions, the Victorian capital seems to be supported by jobs growth.
It will take some time to get a clear read on what is happening with jobs, but the demand from renters in the city suggests jobs are being created and people are continuing to move to Melbourne.
The west is recorded the strongest growth, up 1.8 per cent year-on-year.
Despite Melbourne's overall softening, regional Victoria is booming with Ballarat, Geelong and LaTrobe-Gippsland performing well.
BRISBANE
Inner-city Brisbane is defying the country's downturn with prices up 2.2 per cent while some suburbs in Gold Coast are doing particularly well – Main Beach rose almost 30 per cent year-on-year and Currumbin is up more than 13 per cent.
Large volumes of search activity on realestate.com.au from Sydney suggests these price increases may be driven in part by Sydney money.
CANBERRA
Canberra is currently the second strongest market in Australia and will benefit from a change of prime minister as Labor Governments tend to employ more staff.
There will also be a high need for consultants in the early stages of transition.
With price growth at 1.35 per cent over the past 12 months, it's unlikely these flat conditions will turn negative in the first half of 2019.
ADELAIDE
Adelaide's bucking the downturn-trend with the city's medium hitting the highest level recorded while no region recorded a decline.
Adelaide premium suburbs have grown with Medindie becoming the city's first $2 million median suburb, but so have some of the cheapest suburbs.
Gawler West jumped 35 per cent over 2018, hitting a high of just over $300,000, while one of the city's cheapest suburbs, Elizabeth, rose 7 per cent.
HOBART
Two of the most in demand suburbs in Australia are in Hobart - Battery Point and South Hobart - and Carlton is moving quickly up the most popular list.
2017's quickest moving suburb, Margate, rose more than 18 per cent in 2018, double that for Hobart which suggests Carlton will outperform the market.
The city recorded its first $1 million suburb with Battery Point hitting $1.34 million.
Hobart's price growth is expected to continue this year.
PERTH
The stop-start nature of Perth's recovery appears to have stalled or declined, but suburbs within the city continue to perform strongly.
Peppermint Grove, one of Australia's most expensive suburbs, is still recording increases and West Perth rose almost 27 per cent.
The most in demand suburbs continue to show a mix of beachside (Cottesloe and City Beach), as well as inner West suburbs (Shenton Park).
DARWIN
Like Perth, any recovery in Darwin is stop-start and was completely derailed by the royal commission; any improvements to financing will be a positive for this market.
While prices continue to fall, premium property is holding up.
Fannie Bay is Darwin's most expensive suburb and continues to record very high views per listing and double digit price growth.
Parap, a slightly cheaper suburb than Fannie Bay, rose 7 per cent.
