Demand for housing is down, but claims prices in Sydney and Melbourne could fall by 40 per cent look likely to be overblown, according to a leading property site.
Realestate.com.au, which analysed more than 80 million property searches between July and September, says conditions for sellers in Australia's two most populous cities "aren't great" but that demand should prove sufficient to prevent the most pessimistic forecasts from eventuating.
"Despite recent headlines of doom and gloom, the report reveals that a 40 per cent decline in prices in Sydney and Melbourne is highly unlikely," realestate.com.au chief economist Nerida Conisbee said.
"However, the nation's biggest cities will continue to battle tough conditions for the remainder of the year."
The report, which calculates demand by using the number of property views in the past three months against the average number of property listings, suggests buyer demand nationwide was down 0.3 per cent.
Sydney was the heaviest hit location with buyer demand down 23 per cent and price growth down 3.1 per cent to $790,000 from the previous year.
Demand in Melbourne was also significantly lower than the previous year - down 20 per cent - but significant interest in the rental and foreign investment markets meant prices were up by 1.3 per cent to $640,000 from last year.
South Hobart and Battery Point in Tasmania topped the list of most in-demand suburbs while Adelaide featured two suburbs - Crafers West and Aldgate - in the top five.
Three suburbs in Victoria were listed in the top 10 - Red Hill, Park Orchards and Middle Park - while Collaroy Plateau and Birchgrove in NSW also made the list.