Commonwealth Bank has sharply downgraded its forecast for Australia’s housing market, now expecting national dwelling prices to decline by about 14% from their peak to the eventual trough of the current downturn. That is a forecast for the whole cycle, not a prediction of another 14% fall from today’s prices and not a fall that has already occurred. Brisbane and Perth face larger projected declines, while the timing and depth of any local market correction remain uncertain.
Source check: 3 November 2026, after the RBA’s November rate decision. The accompanying AI-generated illustration is conceptual: it depicts housing-market uncertainty and does not show a particular property, auction or official CBA chart.
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What exactly has CBA forecast?
In an updated economic forecast published on 3 November, CommBank economists raised their expected national peak-to-trough decline to approximately 14%, compared with their earlier 9% forecast from September. The average across five major capital cities was forecast to decline roughly 15% peak to trough. Brisbane and Perth were revised to around 18%, Sydney to 16%, and Melbourne and Adelaide to around 13%. The updated figures were reported in ABC’s live coverage quoting CBA’s research and Australian Broker’s breakdown.
| Market | September forecast | 3 November forecast |
|---|---|---|
| Australia (national) | −9% | −14% |
| Brisbane | −8% | −18% |
| Perth | −8% | −18% |
| Sydney | −13% | −16% |
| Melbourne | −12% | −13% |
| Adelaide | −8% | −13% |
These are dwelling-value forecasts, including houses and apartments, not guaranteed declines for every standalone house or every suburb. CBA also expects national values to fall around 8% during calendar 2026 and a further 3% during 2027 before stabilising in the second half of next year. Annual changes and peak-to-trough changes use different reference dates, so they should not be summed as if they all describe additional future falls from one starting point.
How far have Australian home prices already fallen?
The latest Cotality-based national figures show dwelling values fell another 1.2% in October 2026, their seventh consecutive monthly fall, leaving the national index 6.7% below its March peak. The combined capitals index was down about 8.1% over seven months. Those are observed market changes, separate from CBA’s forecast. Westpac’s commentary on the October Cotality index reports the underlying data and methodology context.
An illustrative national index falling from 100 at its peak to 93.3 after a 6.7% decline would need to reach 86 to be 14% below that peak. That is a further 7.3 index points, or about 7.8% of the 93.3 level — not a second 14% fall. This arithmetic only explains the difference between a cycle forecast and changes already seen; it is not a forecast for any individual property.
Why has CommBank become more pessimistic?
Its September revision already identified weaker buyer momentum, higher mortgage borrowing costs and a downturn spreading from Sydney and Melbourne into previously strong mid-sized capital markets. The 3 November revision reflects a correction that has been faster and broader than CBA previously expected, with fading exuberance in Brisbane and Perth especially important. See CommBank’s September housing-correction report for the earlier baseline.
The Reserve Bank’s decision on 3 November to raise the official cash rate to 4.85% provides further pressure on borrowing capacity, assuming lenders pass some of the increase to borrowers. It is the cash rate, not a standard household mortgage rate. The RBA has warned inflation remains elevated, and the outlook for eventual rate cuts is uncertain. Source: RBA November decision.
CommBank’s broader November economic outlook anticipates subdued household spending and slower growth into 2027, potentially weakening housing demand further. Source: CommBank’s latest economic outlook.
What could a 14% peak-to-trough fall mean in dollars?
A percentage forecast is most useful when applied to a property’s previous market peak, not automatically to its present asking price. For illustration, a dwelling worth $1,000,000 at its peak would be worth approximately $860,000 after a total 14% fall, a $140,000 reduction. A property previously worth $750,000 would be about $645,000, a $105,000 decline. These examples ignore suburb differences, borrowing costs, stamp duty, sale expenses and maintenance, and should not be used as individual valuations.
A lower value does not necessarily create a cash loss for someone who is not selling, but it changes equity, refinancing options and the margin of safety against an outstanding mortgage. Newer highly leveraged buyers may have less equity available to absorb unexpected costs or a life change.
For buyers: a weaker market does not remove due diligence
- Check finance first. Ask your lender or broker how the new rate, borrowing limits and valuation affect your approval and repayments.
- Compare recent settled sales. Advertised prices can lag a falling market; inspect property type, condition, suburb and recent settlement dates.
- Keep a cash buffer. Allow for stamp duty, insurance, strata, repairs and the possibility that rates remain higher for longer.
- Inspect independently. Consider building, pest, strata and title checks. A market correction does not cancel structural or legal risks.
- Buy for circumstances, not a perfect bottom. Your tenure, job security and ability to service the loan matter more than guessing the exact month prices might stabilise.
For a more detailed checklist, see the NextNews 2026 due-diligence guide.
For sellers: how to price when buyers have more choice
Sellers should ask for a current comparative market analysis based on recent sold properties, not only homes still advertised. Set a realistic timeline, understand your minimum acceptable net proceeds and compare marketing expenses with the likely benefit. A property that sits on the market can become harder to sell if its initial asking price no longer matches comparable sales.
At the same time, national forecasts do not replace suburb-level demand. Well-located, distinctive or recently renovated homes may behave differently from the surrounding index. Owners who are not under financial pressure should weigh their circumstances rather than assuming every fall forecast requires an immediate sale.
For investors and refinancers: look beyond purchase prices
Higher interest and insurance costs may offset the benefit of a lower purchase price. Investors should stress-test rent, vacancies, maintenance, fees and taxation under several rate scenarios. Gross rental yield may improve as prices fall, but gross yield is not the same as cash flow after mortgage expenses. Seek qualified advice where tax treatment matters.
Existing borrowers should monitor their loan-to-value ratio, especially if refinancing, switching lenders or selling in a weaker market. Our newly updated RBA mortgage-repayment guide explains what the 4.85% cash rate could mean under transparent loan assumptions.
When could the market stabilise?
CBA expects a stabilisation during the second half of 2027, in part on the assumption that rates begin falling late that year. That timing is uncertain. Inflation, employment, population growth, new housing supply, lending conditions and buyer confidence could make the downturn either milder or deeper. Economists at other institutions have different models and forecasts.
One forecast does not prove that every Australian home will lose 14% of its value. It is best understood as a scenario that buyers and sellers can use to assess risk rather than a guaranteed timetable.
Questions worth asking before you act
- What is the recent settled-price trend in this specific suburb and property type?
- How much deposit or equity remains if prices fall a further 5% or 10% from here?
- Can repayments still be met if the variable mortgage rate rises again or household income changes?
- Does the property meet long-term needs even if prices take years to recover?
- Have you checked selling or buying costs, tax consequences and any special contract conditions?
Would a larger housing correction change your plans? Are you waiting to buy, preparing to sell or reconsidering an investment property? Share your perspective in the comments.
Sources and disclosure
Sources: ABC coverage quoting CBA’s 3 November 2026 revised forecast; Australian Broker’s detailed city projections; CommBank’s September baseline; CommBank November economic outlook; Westpac analysis of Cotality October home values; RBA’s November interest-rate decision.
Disclosure: Prepared with AI assistance and checked against the cited sources. The 14% and city-level figures are Commonwealth Bank forecasts, not recorded losses or guaranteed outcomes. This article provides general information rather than personal financial, investment, tax or real-estate advice. The original AI-generated feature image is conceptual and depicts no actual property or official forecast chart. Read the NextNews website disclaimer for general terms.
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