The Commonwealth Bank has revised down its dwelling price forecasts off the back of weaker sales momentum over the past three months.
It says the housing downturn has been faster and broader than expected earlier in the year.
The Brisbane housing market is also doing worse than previously expected, with average time on market doubling over the course of 2026.
The bank’s Economics Insights report, released this week, says national dwelling prices are now expected to fall by around 9 percent from peak to trough this cycle.
The five capital city average is expected to “trough” around 10 percent below its most recent peak.
The report said the downgrade was driven by three key factors:
- Materially weaker housing market momentum over the past three months.
- Price declines have broadened to the “mid-sized capitals” where tight demand-supply balances have provided less support than initially expected.
- The outlook for interest rates is now higher than it was in June.
“Sydney and Melbourne remain the weakest markets, with expected peak-to-trough declines of around 13 percent and 12 percent, respectively,” the report said.
“But we now also expect a materially weaker outlook for the mid-sized capital cities, with peak-to-trough falls of around 8 percent in Brisbane, Perth and Adelaide.”
Despite the falls, CBA still expected the market to stabilise and begin recovering over 2027.
“However, the recovery is now expected to be more modest, while it also relies on our expectation that the RBA begins cutting rates next year,” the insights report said.
“Without those cuts, we estimate national dwelling prices would be broadly flat over 2027, compared to our baseline estimate for a 2 percent increase.”
The report said Brisbane and Adelaide had each recorded three consecutive monthly price falls, while Perth has recorded four consecutive declines.
Other measures of selling conditions have also weakened noticeably, with auction clearance rates lower and homes taking longer to sell.
“The deterioration in time on market has been particularly pronounced,” the report said.
“In Brisbane the median has increased from 15 days at the start of the year to 35 days over the three months to August,” the report said.
Overall Brisbane is forecast to have a “modest” fall of one percent in dwelling prices over the full 2026 calendar year, off the back of strong growth earlier in the year.
The full report is here
