House prices in Australia will fall by about 10 per cent over 2019 and 2020, although a US-style housing collapse won't happen, according to a new paper from Capital Economics.

"We are more worried than most and suspect that, after hardly rising at all over the next couple of years, house prices in Australia will fall outright in both 2019 and 2020," said Capital Economics chief economist Paul Dales, who wrote the paper.

Mr Dales noted that the Australian housing market looked even more vulnerable to a large fall in house prices than the US did prior to the Global Financial Crisis.