The issue is mostly access to credit and, for at least for past six months, banks have been scrutinising the spending of borrowers more closely when assessing their loan applications, Christopher says. The banks were slammed by the Hayne Royal Commission over lax lending standards. Buyer sentiment has been hit as residential property, particularly in Sydney and Melbourne, is seen as a depreciating asset. The Australian Securities and Investments Commission gave lenders further warning about how they assess applications as it updated guidance for responsible lending requirements this week. Doron Peleg, chief executive of RiskWise Property Research, says the weak lending figures also show how those who would normally be entering the property market are now shying away in anticipation of lower prices.

Loading The Westpac-Melbourne Institute Index out this week showed consumers in Sydney and Melbourne have poor property price expectations. "Buyer sentiment has been hit as residential property, particularly in Sydney and Melbourne, is seen as a depreciating asset," Peleg says. Annika de Bruijne and her husband bought their two-bedroom townhouse in Sydney's lower north shore almost five years ago. They have a four-year-old daughter and plan to upsize within five years. However, following the recent property price slide, they may have to revise that timeline.

The human resources consultant says she feels somewhat lucky they purchased the home in 2014 — three years before Sydney prices peaked. "We're still well ahead on what we paid and we're not planning on having more children, so we are not in any rush now to upsize," she says. Without an interest-rate cut or regulatory changes there will be tough times ahead "However, it is a concern the way the market is going, with the slide in prices likely to continue," she says. "We are watching the market but are not alarmed, we can sit and wait — though the resale value is more critical for us than for someone who is intending to be in their home for next 20 years".

Many property experts are expecting a peak-to-trough drop in property prices of between 15 per cent and 20 per cent. "Without an interest-rate cut or regulatory changes there will be tough times ahead for the property market," RiskWise's Peleg says. Most property experts are expecting a peak to trough fall in property prices in Sydney and Melbourne of between 15 and 20 per cent. Credit:Wayne Taylor In addition, he says there are fears that if Labor wins the federal election, the party's platform to heavily restrict the use of negative gearing by property investors and to reduce the discount on capital gains tax will be a further drag on property markets. Tim Lawless, the head of research at property researcher CoreLogic, is expecting a peak-to-trough fall of up to 20 per cent for both Sydney and Melbourne before prices start to level out in 2020.

However, Lawless says the price declines should be kept in perspective. Sydney house and apartment prices have risen by more than 70 per cent in the past decade, while Melbourne prices have gained even more, he says. This is despite recent price falls of more than 12 per cent from their peak in Sydney in mid-2017 and eight per cent in Melbourne from a top in late 2017, he says. Robert Mellor, managing director of economic and property forecaster BIS Oxford Economics, says it is possible for Sydney and Melbourne markets to stabilise as early as June of this year, but the slump could stretch into the first half of next year. Steve Jovcevski, property expert at comparison site, Mozo, says the Reserve Bank may cut the cash rate, which would help support property markets and that Labor's negative gearing change would not come into effect until 2020.