Sydney will continue to suffer price declines over the next two years, fuelled by stricter lending rules and pessimistic buyers. This is the view shared by the economists surveyed by Bloomberg.

Laminar economist Stephen Roberts told Bloomberg that Sydney is seeing the worst of the housing market downturn: home values in Sydney are already 4.5% lower than last year, a far cry from the 0.8% national drop.

"Much of the decline in house prices seems to be related to housing investors and the tightening of lending standards," he said.

Sydney home prices are expected to decline by as much as 15% and the downturn could last until 2020. For JPMorgan Chase chief economist Sally Auld, any upward price swing should be only be expected to arrive after at least two years.

"Given regulators’ desire to see stability in the house price-to-income and debt-to-income ratios, we think it will be some time before house prices start to move again,” she said.

National Australia Bank chief economist Alan Oster said there are several factors contributing to the cooling of home prices, the biggest of which is credit availability. He said regulations are already starting to bite in order to avoid risks posed by loans such as interest-only mortgages.

"Both households and investors have faced tighter lending standards over the past year, and we think there will be some additional tightening over the next year. In addition, households face a number of headwinds – including weak wage growth, higher utilities prices and an already high debt burden," Oster said.

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