The forecast is a turnaround for HSBC, which at the time of its last estimate in May predicted national housing prices to post a result in 2019 of between 2 per cent decline and 2 per cent growth. The latest figures now predict a national decline next year of between 8 per cent and 3 per cent, reflecting a worse outlook for Sydney and Melbourne, as well as a more challenged Perth.

It is in line with the 12 per cent to 17 per cent decline predicted for the two largest cities last week by consultancy SQM Research, but less bearish than the 20 per cent fall predicted last month by AMP Capital chief economist Shane Oliver.

In his note on Tuesday, Mr Bloxham said the cooling in the housing market to date had been 'orderly' and did nothing to affect his expectation of a 'soft landing' in which house prices gradually fall, rather than crash.

"So far, the cooling has been orderly, with very few forced sales," he said. "This partly reflects that the key fundamentals that support housing demand remain in place − strong population and jobs growth and low interest rates. In addition, although housing supply has been boosted, the market does not appear to be oversupplied. Our central case is for a soft landing, supported by these fundamentals."

Sydney prices are up 75 per cent since 2012; down 8 per cent to date. HSBC

Mr Bloxham said, however, that the release of the Hayne banking royal commission's final report in February could make recommendations that further tighten banking finance and slow the housing market further.

HSBC also does not expect the decline in housing prices to hit household consumption in any meaningful way, limiting the wider fallout to the economy. This contrasts with the more bearish view of consultancy Capital Economics, which last month predicted weaker housing prices would shave 0.3 percentage points off growth over the next three years as consumers spent less as a result of their dwelling values falling.

"While the housing market correction remains orderly and jobs growth remains solid, we expect it to have a limited impact on consumption growth," Mr Bloxham said.

"As we have noted previously, there was little evidence of a positive wealth effect during the boom, and consumer spending has held up well recently, despite the housing market cooling.

Melbourne prices are up 58 per cent since 2012; down 5 per cent so far. HSBC

"In our view, the consumption outlook is much more dependent on the labour market than the housing market."