Revised Forecast: Australian Home Prices to Fall 15%

Australia’s housing correction may have further to run, with a new forecast suggesting national home prices could fall around 15% from peak to trough before reaching a bottom around the third quarter of next year.

The revised outlook reflects the combined pressure of higher interest rates, weaker borrowing capacity and softer buyer confidence. If the forecast proves accurate, the current downturn would extend well into 2027 rather than ending quickly.

For Melbourne’s western growth corridor, this could mean continued price adjustment and more cautious buyer behaviour. Purchasers with secure finance may benefit from less competition and greater negotiating power, particularly where properties remain on the market for longer.

Sellers may need to stay realistic about pricing if values continue to soften. Homes priced according to earlier market peaks could take longer to sell in an environment where buyers are watching the market closely and expecting further falls.

Investors should also focus on the longer-term picture. Lower entry prices may create opportunities, but higher finance costs and the possibility of further value declines make rental yield, cash flow and suburb fundamentals especially important.

Overall, the forecast points to a market where patience may be rewarded. In Melbourne’s west, buyers and investors with strong finances could find opportunities, but decisions should be based on long-term affordability and demand rather than trying to perfectly time the bottom.