Major banks are revising their forecasts, and ANZ now expects prices to fall further than previously anticipated. ANZ forecasts that capital city house prices will fall by 6.2 per cent in 2026 and a further 4.5 per cent in 2027.
Overall, the bank expects prices to decline by approximately 13.5 per cent from their recent peak to their lowest point during the downturn.
Higher interest rates and rising household expenses are contributing to weaker demand. Many prospective buyers are delaying purchases, hoping that prices will fall further. Also, reduced borrowing capacity is limiting what households can afford.
Sydney, Adelaide and Brisbane are expected to experience some of the largest declines, potentially exceeding 15 per cent from their respective peaks. Perth has already recorded substantial quarterly falls, and Darwin is forecast to experience a smaller overall decline.
Lower prices may improve affordability for first-home buyers, but existing homeowners risk lost equity. Those who purchased recently may owe close to their property’s market value. Investors may also face lower rents and greater difficulty selling properties. ANZ also expects another interest rate increase, with rate cuts unlikely before 2027.
What This Means for Individuals, Investors or Small Business Owners
Homeowners should review mortgage repayments and household budgets. Prospective buyers should assess affordability using realistic interest rate assumptions and avoid stretching their finances simply because a property appears cheaper.
Any Potential Tax, Record-Keeping or Compliance Considerations
Tax rules may affect the treatment of investment property income and eventual sale proceeds. Accurate records can be essential when calculating taxable gains or losses. Business owners using property as a business asset should also consider cash flow, financing commitments and any relevant tax consequences before buying, selling or refinancing.
Practical Actions Readers May Wish to Discuss with Their Accountant
Discuss your mortgage and record-keeping arrangements with your accountant. A property downturn can create opportunities, but careful financial planning is more reliable than predicting the market’s lowest point.
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Disclaimer: The information in this article is general in nature and does not constitute financial, investment, taxation, legal or accounting advice. Readers should obtain professional advice relevant to their individual circumstances before acting on any information contained in this publication.
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