House prices should stop falling later this year and could even rise a little in 2020, an economist predicts.

HSBC chief economist Paul Bloxham says there are now some signs the housing market is starting to stabilise.

He pointed to rising auction clearance rates in the major cities and consumer sentiment surveys suggesting households think it is an increasingly good time to buy a dwelling.

“The housing market is also expected to be supported by cash rate cuts over the coming months, which should see mortgage rates fall, and a recent loosening of prudential settings by the authorities, both of which should support the flow of finance,” he said.

HSBC expects house prices to stop falling in the second half of 2019 and pick up in 2020, also supported by first home buyer subsidies and rising household incomes.

Bloxham said HSBC forecasts housing prices will either be flat or rise by up to 4% in 2020.

National housing prices have fallen by 8% over the past 18 months, with HSBC forecasting a peak-to-trough decline of about 10%.

RBC Capital Markets on Tuesday revised its forecast of a 15% top-to-bottom price fall to 12%.

“This suggests that we are around three-quarters of the way through this housing downturn on a national basis rather than a little past the halfway mark,” RBC chief economist Su-Lin Ong said.

“It also hints at a modest correction following a 50% gain in national house prices from 2012 through 2017 and a reasonably orderly one as well.”

Ong said further modest falls in house prices were likely, with RBC predicting a trough would be reached in early 2020.

“We think that recent developments will temper the house price downturn rather than see a near-term bottom and sharp turnaround,” she said.

The RBA is expected to cut the cash rate twice in coming months, beginning next week, while Westpac economists have predicted a third reduction in November.