Australia's property market downturn and economic forecasts
Consensus Summary
Australia’s property market is experiencing a downturn with both TheAge and ABC reporting declines in major cities like Sydney and Melbourne. TheAge states that the big four banks expect property prices to fall by between 3 per cent and 9 per cent this year (2026) and recover only slightly in 2027, with some economists predicting a 4.6 per cent drop in Brisbane and smaller declines in Sydney and Melbourne. ABC’s analysis from ANZ also forecasts a 4.3 per cent fall this year and a 3.4 per cent drop in 2027, with Sydney and Melbourne facing peak-to-trough declines of 14.5 per cent and 12.8 per cent respectively. Both sources agree that the Reserve Bank is unlikely to raise rates further, with TheAge reporting markets expect a cut from December 2027, while ABC notes a 60 per cent chance of a rate rise by the end of 2026. The Reserve Bank’s focus remains on broader economic factors like inflation, labour market tightness, and global risks such as the Middle East conflict. TheAge highlights that the downturn is the fourth in the past decade, while ABC emphasizes that markets like Perth and Brisbane have stronger buffers due to past growth. Economists from both sources suggest the downturn will be temporary, with recovery expected by mid-to-late 2027 or over 2028, driven by falling interest rates and easing inflation.
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Key details reported by multiple sources:
- Property prices in Sydney and Melbourne are expected to fall by between 3 per cent and 9 per cent this year (2026)
- The Reserve Bank is expected to hold the cash rate steady at 4.35 per cent until late next year (2027)
- The Reserve Bank will update its key economic forecasts, last released in May
- Property prices in Sydney and Melbourne are expected to fall by 4.6 per cent this year and 3.4 per cent in 2027 according to ANZ
- The Reserve Bank is monitoring the housing market downturn but not focusing on it for future rate decisions
- The Reserve Bank expects house prices to continue declining gradually for a period
- The Reserve Bank’s cash rate is currently at 4.35 per cent
- The Reserve Bank’s next meeting begins on Monday
- The Reserve Bank’s cash rate is expected to be cut from December next year (2027) according to market pricing
- The Reserve Bank’s cash rate is expected to be cut in the second half of 2027 by some economists
Points of Difference
Details reported by only one source:
- The nation’s big four banks expect property prices to recover in 2027 but not enough to offset this year’s declines
- The Reserve Bank is expected to start slicing interest rates in the second half of 2027
- The national median property value dropped 0.7 per cent to $928,421, taking it back to where it was in March
- Dwelling values dropped by 0.9 per cent through July, led by a steep fall in Sydney and Melbourne
- The sharpest fall in nationwide property values occurred in four years
- The Reserve Bank’s cash rate is expected to be held steady until late next year (2027) with a cut priced-in from December
- The Reserve Bank’s forecasts were last released in May just before the federal budget
- Westpac chief economist Luci Ellis believes interest rates could be falling by August next year (2027)
- The Reserve Bank will not be overly concerned by what is the fourth downturn in housing prices in the past decade
- The Reserve Bank’s cash rate is expected to be cut in the second half of 2027 by Commonwealth Bank economists
- The Reserve Bank’s cash rate is expected to be cut in coming quarters by HSBC Australia chief economist Paul Bloxham
- The Reserve Bank’s cash rate is expected to be cut in the second half of 2027 by NAB economists
- The Reserve Bank’s cash rate is expected to be cut in the second half of 2027 by ANZ economists
- The Reserve Bank’s cash rate is expected to be cut in the second half of 2027 by Westpac chief economist Luci Ellis
- The Reserve Bank’s cash rate is expected to be cut in the second half of 2027 by market pricing
- The Reserve Bank’s cash rate is expected to be cut in the second half of 2027 by economists from the Commonwealth, Westpac, NAB, and ANZ
- The Reserve Bank’s cash rate is expected to be cut in the second half of 2027 by the Reserve Bank’s own forecasts
- The Reserve Bank’s cash rate is expected to be cut in the second half of 2027 by the Reserve Bank’s governor Michele Bullock
- The Reserve Bank’s cash rate is expected to be cut in the second half of 2027 by the Reserve Bank’s staff economic forecasts
- The Reserve Bank’s cash rate is expected to be cut in the second half of 2027 by the Reserve Bank’s board
- Cotality’s analysis shows Melbourne’s dwelling values peaked at $840,000 in November 2025
- A decline beyond 10 per cent in Melbourne would return values to pre-pandemic levels
- Perth, Brisbane, and Adelaide recorded exceptional growth over the past five years
- Even if Perth’s housing market fell 20 per cent from its peak, the median dwelling value would still be around where it was in April 2025
- Sydney and Melbourne prices have declined slightly more than ANZ’s forecasts
- Prices in Brisbane and Perth have started falling earlier than ANZ expected
- Auction clearance rates are sitting well below 50 per cent in major markets like Sydney and Melbourne
- PRD chief economist Diaswati Mardiasmo does not expect house prices to fall by more than 5 per cent
- Dr Mardiasmo believes if inflation continues on its downward trajectory to a level the RBA is comfortable with (around 3.4 to 3.5 per cent), the market will see a change in the winds by mid-to-late 2027
- ANZ economists see prices recovering over 2028
- Financial markets see a 60 per cent chance the RBA will deliver another 0.25 percentage point rate rise by the end of the year (2026)
- The RBA’s cash rate would take the cash rate to 4.6 per cent if raised by the end of the year (2026)
- The RBA’s latest staff economic forecasts indicate house prices will continue to decline gradually for a period
- The RBA’s governor Michele Bullock said the board is monitoring the flow-on effects of the housing market downturn but it is not the bank's focus for future rate decisions
- The RBA’s main focus is excess capacity, tight labour market, particularly in construction, the Middle East conflict, and the AI boom
Contradictions
Conflicting information between sources:
- TheAge says the Reserve Bank will hold the cash rate steady at 4.35 per cent until late next year (2027) with a cut priced-in from December, but ABC says financial markets see a 60 per cent chance the RBA will deliver another 0.25 percentage point rate rise by the end of the year (2026)
- TheAge says the Reserve Bank will start slicing interest rates in the second half of 2027, but ABC says ANZ economists see prices recovering over 2028
- TheAge says the Reserve Bank’s cash rate is expected to be cut in the second half of 2027 by multiple sources, but ABC says the RBA’s latest forecasts indicate house prices will continue to decline gradually for a period
- TheAge says the Reserve Bank’s cash rate is expected to be cut in the second half of 2027 by market pricing, but ABC says financial markets see a 60 per cent chance of a rate rise by the end of 2026
- TheAge says the Reserve Bank’s cash rate is expected to be cut in the second half of 2027 by the Reserve Bank’s own forecasts, but ABC says the RBA’s governor Michele Bullock said the board is not focusing on the housing market for future rate decisions
Source Articles
Big four banks expect property market to feel pain through 2027
Banks expect property prices to fall. The debate is whether it’s a crash or just an “air pocket” of turbulence.
How a minor or major housing downturn could impact your city
New Cotality modelling data shows what property prices could look like across the capitals if the market fell by 5, 10, 15 or 20 per cent.