‘New bottom’: date Australian home prices will stop falling revealed - realestate.com.au

The ongoing decline in Australia's housing market is projected to extend into next year, primarily due to an unprecedented drop in home lending activity. According to forecasts, the national property market is expected to reach its lowest point between late 2027 and early 2028.

Data released by the Australian Bureau of Statistics (ABS) on Wednesday revealed that both the number and value of new home loans plummeted by 15 percent in the September quarter, marking the steepest decline since records began in 2002. This downturn in lending activity has now persisted for three consecutive quarters, signaling potential long-term implications for home prices.

Research conducted by Money.com.au and Primara Research indicates that such a pattern of declining lending has historically preceded every national price downturn since 2008, with home values typically hitting their lowest point between nine to 21 months thereafter. The report suggests that the trough in home prices could occur around the September quarter of 2027.

Sarah Walwyn, the general manager of home loans at Money.com.au, remarked on the current market dynamics, stating, “The peak is behind us, so now we can start looking for the low. On past form, that’s about 12 months away.”

Primara Research further explained that it takes time for sellers to adjust to decreased demand, which contributes to the delayed timing of when home prices reach their lowest. “Sellers take time to accept lower prices, so the low comes around a year later,” the group noted in communication with The Daily Telegraph.

The report from Money.com.au highlighted that over the past 23 years, three consecutive quarters of reduced lending have consistently indicated the severity of market downturns and have never been proven inaccurate.

This analysis comes at a time when Australia’s major banks have downgraded their previous home price forecasts following a recent interest rate hike announced in November. The Commonwealth Bank of Australia (CBA) now anticipates a peak-to-trough decline in national property prices of approximately 14 percent, with expectations that the market peaked in early 2026 and will hit its lowest point by mid to late 2027. CBA does not foresee a rapid recovery in prices once they stabilize.

Similarly, ANZ has projected a cumulative drop of between 7 and 14 percent, with price stabilization expected by late 2027 as the Reserve Bank of Australia begins to lower interest rates. Westpac forecasts a total decline of 10 percent across the downturn, while NAB predicts a drop of about 7 percent.

The ABS lending statistics have sparked debate, particularly as the record decline was driven by decreases in both investor and first-home buyer loans. Investor loans experienced the most significant drop on record, falling by 31 percent during the quarter, while first-home buyer loan commitments decreased by 9 percent.

Cate Bakos, chair of the Property Investment Professionals of Australia, criticized the government’s recent budget measures aimed at reforming negative gearing and capital gains tax, stating that these changes did not yield the intended results. “The Federal Government’s supposed intention to encourage more first home buyers into the market has failed spectacularly,” Ms. Bakos remarked. “It’s clear that the new policy settings have torpedoed investor activity and will result in fewer rental properties and higher rents in the months ahead.”

Valuations group Herron Todd White echoed these sentiments, noting that tax reforms and multiple interest rate hikes have severely undermined confidence in the property market.