House prices are likely to fall by about 10 per cent this year, despite rising auction clearance rates, as oversupply and weak demand from cautious buyers hold back a recovery, experts say.

Speaking at the AFR Inside Markets Webcast, EY Oceania chief economist Jo Masters said while the country has done well on the health front, the threat of a second wave of the coronavirus at a time when a large amount of housing supply is coming online remained a challenge for the market.