Finder reported bank forecasts of further price falls into 2027, and PIPA Chair Cate Bakos said she believes the largest part of the correction has occurred, but does not expect a quick recovery.
What the forecasts say
Richard Whitten reported for Finder on the 19th of August 2026 that national prices fell 0.7 per cent in July. ANZ now forecasts a 4.3 per cent fall in capital city prices in 2026 and a further 3.4 per cent in 2027. NAB forecasts a 5 per cent fall this year, with peak to trough declines of about 10 per cent in Sydney and Melbourne and 2 to 4 per cent in the mid-sized capitals. It expects some recovery in late 2027.
Cate Bakos on the outlook
Cate Bakos, Chair of PIPA, told Finder that she believes the largest part of the correction has occurred, but does not expect a quick recovery. She described the budget changes as the biggest shock, combined with three consecutive rate rises, global instability and rising household costs.
On first home buyers, she said conditions are more attractive than before the budget, and that many have not acted on them.
The market conditions for first homebuyers are more attractive than pre-budget. However, first homebuyers are notoriously skittish and many haven’t grabbed hold of the opportunity staring them in the face.
Cate Bakos, Chair of PIPA, quoted by Finder, the 19th of August 2026
Why past rebounds may not repeat
The article compared the current fall with the two largest recent downturns. Combined capital city values fell 8.2 per cent over 19 months in 2017 to 2019, and 8.1 per cent over nine months in 2022 to 2023, according to Cotality. In both cases prices recovered quickly, and by October 2024 they had risen 14.5 per cent from the 2023 low.
The article also reported conditions that differ from those earlier downturns. RateSeeker director Nick Chong said that this cycle is distinguished by constraints on borrowing capacity itself. He pointed to higher rates, tighter lender assessment of heavily geared borrowers and APRA’s limits on lending at high debt to income ratios. He added that investors holding grandfathered properties are reluctant to sell and wary of buying established stock.
The recovery in 2019 followed cash rate cuts and an easing of lending assessment rules. Those conditions are not present in current settings, with rates raised three times in succession, and the change to negative gearing is a change in tax policy rather than a cyclical factor. A forecast recovery date is an estimate, and NAB has already revised its forecast for this year from a 2 per cent fall to 5 per cent.
What falling prices mean for a first home buyer
In a falling market, buyers generally have more stock to choose from, more time for due diligence and more scope to negotiate on price and conditions. PIPA’s commentary on buying at auction without competition sets out how to use that position at auction. The risk is negative equity, which Herron Todd White’s Cameron Kusher has identified as a concern for new buyers. A buyer who purchases with a small deposit early in a decline can owe more than the property is worth if prices keep falling.
The purchase decision itself can reduce that risk through:
- A deposit and a repayment buffer sized for rates above the current level.
- A property selected on evidence of long-term demand, with comparable sales to support the price paid.
- An intention to hold for long enough that a further fall in the near term does not force a sale.
A buyer who meets those conditions is less exposed to the timing of the market’s low point, which can only be identified after it has passed.
Advice for a first purchase
A first home buyer relying on a falling market to improve their position benefits most from a written assessment of borrowing capacity at higher rates and the sales evidence for the property in question. QPIA accredited advisers can be located through PIPA’s adviser search. The lending conditions behind the current market are covered in investor lending after the budget.
Reported by
Richard Whitten, Finder, 19 August 2026
Forecasts from ANZ and NAB. Historical price data from Cotality. PIPA has commented on this coverage for members and consumers. Copyright in the original article remains with its publisher.
