Major Australian mortgage lender ANZ has said that it is forecasting Sydney and Melbourne to lead the way in house prices falling across the nation. It expects Australia’s two largest cities to see a drop of 10% in the value of the average household across 2019.

This will follow similar but less sharp patterns across the nation, as predictions suggest that the average home in Australia will lose 2% of its value next year, following a 4% decrease in 2018.

A rise in lending standards this year precipitated the first drop after the Royal Commission inquiry into financial misconduct discovered a range of poor mortgage lending tactics across the board, which led to increased scrutiny and rumors of tighter regulations to come.

Next year, house prices should fall because ANZ thinks that the Reserve Bank of Australia (RBA) is about to bump up interest rates again.

However, ANZ economists do believe that this decrease in house prices is happening steadily enough to not cause any imminent threat of an economic crash. Prime Minister Scott Morrison echoed this thought recently, saying that it is his job to make homes affordable for more Australians in a sustainable way that would not lead to any long-term economic worries. He criticized opposition plans to speed up the process further.

ANZ Economists Daniel Gradwell and Joanne Masters said that when taking these forecasts into account, they expect Melbourne and Sydney to bear the brunt of the drop in house prices. They added that they “expect Sydney to perform slightly worse than Melbourne,” mainly due to the fact that increased housing supply is coming at the same time as “softer population growth.”

Figures released from CoreLogic this week show that the trend appears to have started much sooner in Sydney. The city has already seen the average home value fall by 6.1%, compared to 2.9% in Melbourne.

Smaller cities and regional areas should not see trends as stark as this, however, as constraints on the affordability of homes are not much of a problem. This may go some way to metering out the 10% drop in Sydney and Melbourne compared to the nationwide 2% drop.

Gradwell and Masters commented that they are “more optimistic on the Brisbane, Canberra and Adelaide markets.”

They added that Brisbane has been “benefiting from accelerating population growth,” while Canberra and Adelaide are not “highly sensitive to tighter credit conditions” and have benefited in part from “relatively strong housing affordability.”

Meanwhile, house prices in Australia’s mining hubs, such as Darwin and Perth, will also begin to see drops further down the line, as economists say that the current boom in mining will inevitably result in some adjustment in the housing market.

The mining industry is looking financially stable for the first time since it underwent a recession half a decade ago and massively shed its workforce. It wants to undertake large recruitment drives and shore up its production at a time of positive response to commodity values worldwide.

This means that house prices in Perth and Darwin will “slide further as the last of the post-mining boom adjustment wraps up,” while Hobart prices are also set to fall as the “fundamentals around the economy soften,” according to Gradwell and Masters.