A world bank has warned that Australia’s property market is set to suffer a far bigger crash than anywhere else in the world, as fears of a global recession grow.

Unlike the last global recession in 2008, Australia’s real estate sector is expected to be hit harder, while the US will emerge largely unscathed.

That’s according to the latest report released by Goldman Sachs earlier this month, titled “The Real Estate Slowdown: Bigger Deal Down and North.”

The bank’s research concluded that a major crash will cause house and housing prices to drop drastically by the end of next year.

Australian properties will plunge 18% after the bubble burst, if the report is correct.

New Zealand is the worst in the report, with property values ​​dropping 21%. Canada was also named and shamed after predictions of a 13% drop.

It comes as real estate data already indicates the sector is in decline in Australia after five consecutive months of interest rate hikes by the central bank.

According to the report, the other G10 countries will experience a much smaller decline in property prices.

In France, the national average for properties will drop by just 6% by the end of 2023.

It was even better in the UK, which is expected to remain largely stable.

Meanwhile, in the United States, properties will actually increase slightly, by 1.8%.

“Across the G10, home sales are falling rapidly and home price growth is slowing, with outright price declines in places that have seen the largest increases during the pandemic,” write the Goldman Sachs researchers. .

Indeed, in 2021, the Australian property market has been supercharged, with house prices increasing nationwide by 25% year-on-year.

At its peak, the combined value of all Australian properties exceeded $9 trillion.

The United States and the United Kingdom, by comparison, have never seen such a big boom and therefore will not fall as much either.

Goldman Sachs’ forecast is broadly in line with what Australian banks have forecast for the year ahead.

At the end of last month, Westpac warned Australians of 18% in Melbourne and Sydney by the end of next year.

However, the rest of the country saw a much more moderate decline, averaging around 8%.

The week before, ANZ also released a similar forecast, with prices in the capital expected to fall 18% by the end of next year before climbing 5% by the end of 2024.

As cost of living pressures take hold and interest rates rise, there are already early signs that the real estate sector is caught up in a market downturn.

According to PropTrack’s latest house price index released earlier this month, house prices in Australia have fallen 2.7% nationally since their peak last year and any rise since the start of 2022 is all but gone.

In August, house prices in Australia fell 0.39%, but the regions were the hardest hit by rising interest rates, with prices plunging at their fastest pace since 2011.

Sydney prices continued to fall by 0.49%, but have seen a dramatic fall especially in the past six months.

In fact, house prices in Sydney in August last year were higher than they are now.