CBA predicts Brisbane will see the steepest fall in housing prices.
One of Australia’s biggest bank has issued a brutal warning of the worst housing crash on record – which would see shock six-digit price falls across the capitals.
The Commonwealth Bank’s latest economics update, released Tuesday, flagged an unprecedented downgrade to the housing outlook – the deepest crash in 45 years – seeing median cuts come in as high as $199,000 in one capital alone.
It warned a faster and broader correction than CBA expected in its September update forced the move – triggering brutal downgrades across all major mainland capitals off a 14 per cent peak-to-trough national collapse.
Perth has already exceeded CBA’s previous peak‑to‑trough forecasts prompting the revision.
Capital cities are expected to bear the brunt of the falls with the combined five-capital city index set to tumble around 15 per cent before bottoming in late 2027.
If realised, the 14 per cent national correction would eclipse the 8.6 per cent slump seen during the 2017–19 banking royal commission to become the steepest drop in the 45-year history of the CBA’s monthly index series.
CBA senior economist Trent Saunders confirmed the property correction has become “faster and broader than expected” which forced emergency cuts to price outlooks across every mainland capital city.
“We have revised down our dwelling price forecasts again,” the bank’s economic update revealed,” he said.
“We now expect national dwelling prices to fall by around 14pc from peak to trough this cycle, while the five-capital city average is expected to trough around 15pc below its most recent peak.”
“The downgrade reflects a faster and broader correction than expected at our last update on 1 September. National values are already 6.7pc below their March peak and the combined 5‑capitals are 8.2pc below peak.”
He said Brisbane and Perth had already exceeded CBA’s previous peak‑to‑trough forecasts, while historical revisions have again marked down price growth in the mid‑sized capitals.
“As a result, we expect materially deeper falls in Brisbane and Perth, with 18 per cent peak‑to‑trough falls in both cities as fading overexuberance takes hold and more than offsets the effect of tight supply conditions.”
“We also now expect peak‑to‑trough falls of around 16pc in Sydney and 13pc in Melbourne and Adelaide.”
CBA Dwelling price forecasts. Source: CBA
An 18 per cent collapse strips $199,040 from typical properties, dragging values down to $906,740. For standalone houses (peaking at $1.227m), the hit reaches $220,900, pushing median houses to $1,006,400 and flirting with the loss of the city’s seven-figure mantle.
Sydney dwellings will shed $195,200 to trough around $1,024,800. With values already down 10.1 per cent ($123,220), another $72,000 of losses remain ahead.
Perth owners face a cumulative loss of $147,600, taking median prices down into the high-$600,000s ($672,400).
Wiping out $104,650 from typical properties, with median values troughing at $700,350.
Shedding $102,700 in homeowner equity, pulling the median down to $687,300.
The one silver lining was that rental yields are expected to climb off weaker dwelling prices and strong rent growth – with the national rental yield now forecast to rise from around 3.75 per cent prior to the Budget to around 4.75 per cent by late 2027, CBA said.
“We expect the market to stabilise in the second half of 2027, supported by lower dwelling prices and higher rental yields, underlying supply tightness, and the eventual easing in monetary policy. However, we do not forecast a material recovery and there remains uncertainty over the interest rate outlook.”
CBA expects peak‑to‑trough falls of around 16pc in Sydney. Picture: NCA NewsWire / Max Mason-Hubers
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