CBA Tips 9% National House Price Fall to April 2027

CBA now expects a 9% national house price fall peak-to-trough by April 2027, as 93% of capital city suburbs recorded a decline over winter.

How Far Have Prices Actually Fallen?

The correction is no longer confined to Sydney and Melbourne, or to the upper end of the market. Cotality's national Home Value Index fell 0.9% in August, taking values 3.1% lower over the winter quarter and 3.6% below their March peak, according to The Adviser. That marks five consecutive months of national price falls, with 93% of capital-city suburbs recording some level of decline over winter.

Sydney led the deterioration: dwelling values fell 1.4% in August and 4.7% over the quarter. Melbourne and Canberra each dropped 1.1% for the month, Brisbane fell 1%, and Adelaide and Perth were both down 0.8%. Australian Broker reports that even Darwin — which had been holding up — recorded a decline over the quarter.

Cotality head of research Tim Lawless said the breadth of the Sydney decline was historically significant. "I would argue that we are headed for the largest correction in Sydney for at least the last 40 years and that view is not breaking from the pack," Lawless said. Annualising the quarterly rate implies an 18.6% annual fall — which would surpass the previous record peak-to-trough correction of 13% between 2017 and 2019 during the credit crunch. "What started as a more concentrated easing across higher-value segments has now become a much more generalised softening, with the vast majority of capital city suburbs recording some level of decline," Lawless said.

CBA's Revised Forecast: Deeper, Wider, and Longer

CBA senior economist Trent Saunders announced a significant downgrade this week. The bank now expects national dwelling prices to fall roughly 9% from peak to trough, with the five-capital-city average expected to trough around 10% below its most recent peak.

"Sydney and Melbourne remain the weakest markets, with expected peak-to-trough declines of around 13 per cent and 12 per cent, respectively. But we now also expect a materially weaker outlook for the mid-sized capital cities, with peak-to-trough falls of around 8 per cent in Brisbane, Perth and Adelaide," Saunders said.

CBA now expects the downturn to run until April 2027, with national values sitting about 9% below their early-2026 peak at the trough. The bank forecasts national prices to decline 5% through 2026 and the five-capital-city average to fall 6% for the calendar year. "Prices should then begin to recover, with national dwelling prices forecast to rise by 2 per cent over 2027," Saunders said.

The downgrade followed a worse-than-expected three months since CBA's June forecast update. "Even against that weaker starting point, the adjustment over the past three months has been larger and faster than we anticipated," Saunders explained. Contributing factors included materially weaker housing market momentum, price declines broadening to mid-sized capitals, and an interest rate outlook higher than CBA had assumed in June.

MPA Australia reports that AMP chief economist Shane Oliver's independent modelling sits in a similar range — a 10% national peak-to-trough fall, revised up from an earlier 7% estimate, with Sydney houses down around 13%. Oliver estimates the correction is only around 35% complete, with a bottom unlikely before the June quarter of 2027.

HSBC chief economist Paul Bloxham was direct about what needs to happen before the market turns: "You're going to need to see a circuit breaker before the housing market actually starts to turn, before buyers feel like they want to come back. That circuit breaker is normally the market starting to believe that interest rates are going to come down."

With futures markets pricing roughly 70% odds of an RBA hike at the 28-29 September meeting, that circuit breaker is not imminent.

What Is Driving the Falls — and Whether Supply Can Cushion Them

Several forces are compounding each other rather than working in sequence.

MPA Australia reports that RBA analysis shows removing negative gearing is equivalent to roughly a 60-basis-point increase in mortgage rates for an investor targeting a typical 4% rental yield — a material repricing that has already shown up in investor housing finance applications falling more than 20% since the federal Budget. Westpac reported a 20% drop in mortgage applications within three weeks of the investor tax changes taking effect. The Adviser reports that credit aggregates processed by Westpac showed investor credit growth falling to its weakest monthly pace in around two years in July, while owner-occupier credit growth held broadly steady.

Building approvals are also beginning to soften. ABS data released 1 September showed total dwelling approvals fell 3.6% in July to 17,687 dwellings. Private-sector house approvals dropped 4.2% to 10,199 dwellings; apartment approvals fell 10.1% to 4,344 dwellings in original terms. ANZ noted July marked the largest monthly decline in the private house series since 2024. At an annualised pace of around 206,000 dwellings, Australia is running well short of the 240,000 new homes per year required to meet the government's stated target of 1.2 million homes by 2029.

There is a structural floor, however. Ray White chief economist Nerida Conisbee observed that high replacement construction costs put a floor under established property values: if building a new home becomes too expensive relative to established prices, buyers shift to the established market, and that dynamic supports a price base. "There's only so far that replacement costs can increase without affecting how house prices move," she said. Conisbee also predicted that when buyers finally feel the market has reached a plateau, a relatively sharp recovery often follows — as it has in previous cycles.

What This Means for Buyers, Owners and Investors Right Now

For existing homeowners, the data is genuinely uncomfortable, and no credible economist is calling the bottom yet. If your equity position is sound and repayments are manageable, the general case is to avoid selling into a falling market unless circumstances require it.

For aspiring first-home buyers, conditions have shifted materially. Prices across every major capital except Darwin are lower than they were in March. Affordability remains stretched — serviceability is the key constraint with rates at 4.35% and rising — but the price entry point has improved. Use the borrowing power calculator to understand what you can access today and model what a further rate rise would do to that capacity.

If you're an investor weighing your position, falling values, reduced borrowing capacity and higher after-tax holding costs all warrant a fresh look at your numbers. A broker conversation is a reasonable starting point.

And if you're currently on a rate that's no longer competitive, reviewing your refinance options is worth doing. The refinance savings calculator can show you what a lower rate is actually worth over the remaining life of your loan, even in a declining market.

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