Depending on who you speak to and who you read, the Australian housing market is rebounding after a period in the doldrums or is still locked in a downwards spiral.

Some say the Reserve Bank’s double rate cut in the weeks after the federal election, plus loosened credit standards, have been crucial in sweeping away the gloom.

With borrowing costs now lower than ever and the prospect of more rate cuts to come – possibly as early as Tuesday – the way has been cleared for prices to start rising in the traditionally busy spring selling season after 18 months of decline from the market peak in 2017.

But sceptics warn the mini-bounce is just a blip. Although they might agree there has been positive growth in many areas of the country, they say values are being inflated again only by easy credit, that the real economy is too weak and prices could still fall by at least another 10%.

They point to this week’s desperately bad figures from the construction industry, which showed the total value of building work on homes in the June quarter dropped by a seasonally adjusted 5.1% – or $699m – on the previous three months. Data about private capital expenditure was almost as bad.

Taken together, the “incredibly weak” data, to use UBS’s phrase, has prompted economists to revise downwards their forecasts for economic growth for the second quarter – due out on Wednesday.

The figures describe an economy in retreat, especially the critical construction sector, which could lose thousands of well-paid jobs.

Martin North, of Digital Finance Analytics, expects a small increase in prices in the coming months but says as they stabilise more people will put their homes on the market and values will begin to fall again.

“House prices in the inner city areas of Sydney and Melbourne look a bit stronger because there is lower supply and more appetite from buyers. If you go granular it’s a different story,” he says, pointing to his research that showed a 30% plunge in unit prices in the outer Sydney suburb of Ryde in the past 12 months.

Rising unemployment and stagnant wages are threatening currents that could pull the market down. The prospect of a worldwide recession on top of that would make the situation even worse.

“Assuming no international crisis, prices will be around 10% lower in a couple of years than they are now,” he says. “If we get a crisis then could be 20% or more … but the average will vary across the country and by property type.”

But in an argument that shows the polarisation of debate, some housing market analysts say the slowdown in construction merely removes another factor holding prices back – oversupply – and as the pipeline of building work dries up in the coming months, prices will inevitably rise.

What is not in doubt is that property prices are very important to households across the country who might be thinking about buying or selling: should they take the plunge, or should they wait?

Pete Wargent, a buyer’s agent in Sydney, has no doubt. He says the market outlook “turned on a dime” after the 18 May election: “If you’re ever going to buy, now’s the time because we’re looking at a low-interest rate environment for five to 10 years.”

Figures from CoreLogic suggest he might be right. The research company keeps a monthly scoreboard and the latest numbers suggest prices in Sydney and Melbourne have risen 1.58% and 1.69% in the past quarter compared with the previous three months. The aggregate for Australia’s five largest cities is a rise of 0.68%. That follows a fall from the 2017 peak of almost 15% in Sydney and more than 10% in Melbourne.

Matthew Hassan, an economist at Westpac, says the bank’s monthly survey showed Sydney’s price correction “has now clearly ended”, with a 1.3% rise in August. Louis Christopher, managing director of SQM Research, is also confident and even thinks there could double-digit growth in prices in the two big cities in the next year as credit becomes easier to obtain and more stock comes up for sale.

Jeremy Rosens, director of Gary Peer, a Melbourne Bayside estate agency, says the market feels more positive than it did six months ago. He attributes that to the outcome of the federal election and the subsequent policy resettings by Apra.

“It feels like there is more money out there,” he says. “Six months ago we might have had one or two bidders but now we have multiple bidders at or above the vendor’s expectations.”

He also says investors have returned to the market, having “all but disappeared” a year ago, and the outlook is positive.

Credit could become even cheaper when the RBA holds its monthly meeting on Tuesday. Many economists think it could cut the cash rate from its current 1% at least twice in the next six months, taking mortgage rates into uncharted territory below 3%.

Research by RateCity.com.au shows six lenders already have variable rates with a “2” in front. That number is expected to climb to 20 after the next RBA rate cut if banks pass on at least 0.2% to borrowers.

But Damien Klassen, of Nucleus Wealth, in Melbourne, is concerned that policymakers appear intent on propping up the economy by encouraging more people to borrow money and buy houses.

With Australian households already the second-most indebted in the world at 120% of GDP (Switzerland is top on 128%), the policy could work only by incentivising first-time buyers and hoping for more immigration to increase demand.

“The problem is that debt is still greater than income and in the end you can’t fight the maths,” Klassen says. “You can’t pay off the debt if your income is not growing, so you get more into debt.

“The Reserve Bank has been forced into cutting rates because the government is chasing a surplus, so we have reached a plateau for the short term. We’ve already broken the glass in case of an emergency. The housing market is vulnerable, it’s fragile, so if we get an external shock such as from upheaval in Hong Kong or from Brexit there is nothing to stop it falling quite significantly.”