Why ANZ Just Slashed Its Australian Housing Forecast
ANZ expects a deeper housing downturn as market conditions weaken
ANZ economists have significantly downgraded their outlook for Australian housing prices, forecasting deeper declines across the country's capital cities in both 2026 and 2027.
The bank now expects capital city dwelling prices to fall 4.3% in 2026 and another 3.4% in 2027, compared with its previous forecasts of declines of 2.1% and 3.3%, respectively.
The revised outlook reflects a housing market that has softened more than economists expected in recent months.
Peak-to-trough decline could reach 10.6%
According to ANZ's updated forecasts, the combined capital city market could experience a 10.6% peak-to-trough decline.
Sydney and Melbourne have already recorded slightly larger price declines than ANZ previously anticipated, while property prices in Brisbane and Perth have also started falling earlier than expected.
The revised forecasts suggest the housing correction could be broader and deeper than previously anticipated.
Why is the housing market weakening?
ANZ economists point to several factors weighing on housing sentiment. Restrictive interest rates, recent tax policy changes and global uncertainty are all contributing to weaker market conditions.
Higher interest rates can reduce borrowing capacity and place additional pressure on household budgets, while uncertainty can make potential buyers more cautious about committing to property purchases.
The combination appears to have weakened housing demand more quickly than ANZ had expected.
Sydney and Melbourne remain under pressure
Sydney and Melbourne are among the markets where prices have fallen more than ANZ previously forecast.
However, weakness is no longer limited to those major markets. Brisbane and Perth have also begun experiencing declines earlier than expected, suggesting the housing slowdown is becoming more widespread across Australia's capital cities.
What investors and homeowners should watch
The latest ANZ forecasts put greater focus on the direction of interest rates, household sentiment and property demand. Further changes in borrowing conditions could influence how quickly the housing market stabilises.
For homeowners and investors, the key question is whether the current downturn remains a temporary correction or develops into a deeper and longer-lasting decline.
For now, ANZ's revised forecast signals that Australia's housing market is facing stronger headwinds than previously expected, with capital city prices potentially falling 10.6% from peak to trough.
Disclaimer:
General Financial Product Advice and Regulatory Framework: Pristine Gaze Pty Ltd (ABN 66 680 815 678, ACN 680 815 678) operates as Corporate Authorised Representative (CAR No. 001312049) of Alpha Securities Pty Ltd (AFSL 330757), which is licensed and regulated by the Australian Securities and Investments Commission under the Corporations Act 2001 (Cth). This report contains general financial product advice only and has been prepared without consideration of your personal objectives, financial situation, specific needs, circumstances, or investment experience. The information is not tailored to individual circumstances and may not be suitable for your particular situation. Before acting on any information contained herein, you should carefully consider its appropriateness having regard to your personal objectives, financial situation, and needs, and consider seeking personal financial advice from a qualified financial adviser who can assess your individual circumstances and provide tailored recommendations.
Investment Risks and Market Warnings: All investments carry significant risk, and different investment strategies may carry varying levels of risk exposure including total loss of invested capital. The value of investments and income derived from them can fluctuate significantly due to market conditions, economic factors, company-specific events, regulatory changes, commodity price volatility, currency fluctuations, interest rate movements, and other factors beyond our control. Securities markets are subject to market risk from general economic conditions and investor sentiment, liquidity risk affecting the ability to buy or sell securities at desired prices, credit risk from issuer default or deterioration, operational risk from inadequate internal processes, sector-specific risks including industry regulatory changes, technology obsolescence, management changes, competitive pressures, supply chain disruptions, and mining-specific risks including resource estimation uncertainty, operational hazards, environmental compliance, permitting delays, commodity price cycles, geopolitical factors affecting mining operations, and exploration risks. Small-cap and speculative mining stocks carry additional risks including limited liquidity, higher volatility, dependence on key personnel, limited operating history, uncertain cash flows, and potential failure to achieve commercial production.
Information Accuracy and Limitations: While we endeavour to ensure information accuracy and reliability, we make no representations or warranties (express or implied) regarding the accuracy, reliability, completeness, timeliness, or suitability of information provided, except where liability cannot be excluded under applicable law. This report may include information from third-party sources including company announcements, regulatory filings, research reports, market data providers, financial news services, and publicly available information, which we do not independently verify and for which we assume no responsibility. Past performance, examples, historical data, or projections are not indicative of future results, and no guarantee of future returns is provided or implied. To the maximum extent permitted by law, Pristine Gaze Pty Ltd and Alpha Securities Pty Ltd, together with their respective directors, officers, employees, representatives, and related entities, exclude all liability for any errors, omissions, inaccuracies, loss or damage (including direct, indirect, consequential, or special damages) arising from reliance on information provided, investment decisions made based on this report, market losses, opportunity costs, and technical issues or system failures.
