Australians who are enjoying lifestyles beyond their means could soon find themselves in the red as housing prices plummet by 'as much as 40 per cent', according to a leading market analyst.

The drop will see housing prices in Sydney and Melbourne decrease as banks tighten lending restrictions and end low-interest loans.

In the past 10 years, many first-time buyers were able to snap up their dream homes with the help of generous mortgage loans from banks.

Now, bright-eyed investors who purchased properties outside of their financial means have helped trigger the housing market plunge.

In the past 10 years, many first-time buyers were able to snap up their dream homes with the help of generous mortgage loans from their banks

Leading property analyst Louis Christopher told 60 Minutes Sydney and Melbourne were both long overdue for a drastic 'correction' in house prices.

'On our numbers, Sydney was effectively over 40 per cent overvalued and Melbourne was overvalued by the same amount,' Mr Christopher said.

Taking to social media after the program aired, Mr Christopher said the risks faced by Sydney and Melbourne were 'not as present in our other cities'.

'Of course a scenario where those two cities are having a major correction would be damaging for the greater economy,' he added.

Data scientist Martin North agreed, saying he believed Australia was facing a 'debt bomb' similar to the United States in 2006 before its market crashed, sparking the global financial crisis.

'We are uniquely exposed, because as a society and as a government and as a regulatory system - we're all banking on the home price engine to just (keep) giving and giving - but it's not going to,' Mr North said.

'We've got a debt bomb, we've got a debt crisis, and at some point it's going to explode in our face.'

House prices in Sydney and Melbourne will decrease as banks tighten lending restrictions and end low-interest loans

There are now concerns housing prices in Sydney and Melbourne could plummet to almost half their former asking price, with optimistic analysts predicting a fall of at least 10 per cent to 15 per cent.

Some homeowners have been advised to 'get out while they can' and not sit on their property.

'The ones that can't afford to sit should effectively sell - get out while you can,' leading liquidator, Jamieson Louttit said.

'I think the banks are going to cover their own a*se.'