Banking
CommBank downgrades housing outlook as price falls spread beyond Sydney and Melbourne
National dwelling prices are now expected to fall 9% peak-to-trough as momentum slows across Brisbane, Perth and Adelaide.
Reported from commbank.com.au→ — read the original alongside this account.
Commonwealth Bank has downgraded its property outlook, forecasting national dwelling prices will fall around 9% from peak to trough as downturns spread to previously resilient capital cities.
The revised projections were released in an Economic Insights report by CommBank senior economist Trent Saunders, following a 0.9% fall in national dwelling prices in August.
August marked the fifth consecutive monthly decline nationally, leaving prices 3.6% below their March peak.
“The adjustment over the past three months has been larger and faster than we anticipated,” Saunders said.
Sydney and Melbourne remain the weakest major markets. Sydney prices fell 1.4% in August to sit 7.1% below their February peak, while Melbourne prices dropped 1.1% in August, putting them 6.5% below their previous peak. CommBank now forecasts total peak-to-trough falls of around 13% in Sydney and 12% in Melbourne.
Price falls have now widened across the country. Brisbane and Adelaide have registered three consecutive monthly declines, while Perth prices have fallen for four straight months. The shift in Perth follows gains of 2% to 2.5% every 28 days earlier in the year.
CommBank projects peak-to-trough price falls of around 8% across Brisbane, Perth and Adelaide.
Selling times have lengthened alongside the price drops.
In Brisbane, median days on market rose from 15 days at the start of the year to 35 days over the three months to August. In Perth, median selling time increased from nine days to 22 days over the same period. Auction clearance rates have also softened compared to last year.
Saunders cited three drivers behind the downgraded outlook: faster-than-expected loss of market momentum, the spread of price falls into supply-constrained cities, and higher interest rate expectations.
CommBank expects the Reserve Bank of Australia to lift the cash rate by 25 basis points to 4.60% in November. The bank noted this increase would compound existing pressures from higher borrowing costs, weaker buyer sentiment and housing tax policy changes announced in the Federal Budget.
Prices are forecast to stabilise and begin recovering in 2027 with modest 2% growth across the year. However, that projection depends on the RBA cutting rates in May and August next year. CommBank estimates prices would remain broadly flat throughout 2027 if the cash rate stays at 4.60%.
The national rental vacancy rate stood at 1.8% in August. CommBank expects the market adjustment to continue through the first half of next year before tighter supply and lower prices offer support to buyer demand.