Major Banks Forecast Deeper Property Price Falls

Australia’s housing outlook has weakened further, with AMP Chief Economist Shane Oliver and ANZ economists both revising their forecasts after recent interest rate increases and continued weakness in buyer confidence.

AMP now expects national home prices to fall around 15% from peak to trough, with the market not reaching a bottom until around the September quarter of 2027. The forecast reflects higher rates, softer investor demand and weaker confidence.

ANZ has also downgraded its outlook, forecasting capital-city prices to fall 6.2% in 2026 and a further 4.5% in 2027, producing an estimated peak-to-trough decline of about 13.5%.

For Melbourne’s western growth corridor, this suggests the current correction may continue for longer than many buyers initially expected. Softer prices could create opportunities, but higher borrowing costs mean affordability remains challenging.

Buyers with secure finance may benefit from reduced competition, longer selling times and greater negotiating power, particularly where vendors are motivated.

For investors, a longer downturn makes rental yield, cash flow and local demand more important than relying on short-term capital growth. Areas supported by population growth, infrastructure and employment may be better positioned over the long term.

Sellers may also need to adjust expectations if values continue to soften through 2027, with realistic pricing becoming increasingly important.

Overall, the latest forecasts point to a more prolonged housing adjustment. For long-term buyers and investors in Melbourne’s west, the weaker market may create opportunities, but patience and strong financial planning will remain essential.