CBA Admits They Were Wrong. Australia’s Property Market Worse Than They First Thought
By: Niro Thambipillay
September 3, 2026
Commonwealth Bank has sharply downgraded its Australian property outlook after the market weakened faster than it expected. CBA now forecasts a national peak-to-trough fall of about 9%, with Sydney and Melbourne expected to record the largest declines. The headline sounds severe, but the bank’s own charts contain an important detail: much of the decline has already occurred, and every capital-city market is forecast to stabilise and begin recovering during 2027.
In this analysis, Niro Thambipillay separates the headline from the timing, explains what CBA expects city by city, and shows why current buyer activity may appear in official price data only months later.
TL;DR
CBA now expects Australian dwelling values to fall about 9% from peak to trough, including roughly 13% in Sydney, 12% in Melbourne and 8% in Brisbane, Perth and Adelaide. However, July values were already 2% below the March peak, so the forecast includes falls that have happened. CBA expects prices to stabilise and begin recovering during 2027, with the strength of that recovery depending on RBA rate cuts.
Key Takeaways
- CBA’s downgrade is substantial: the bank says the adjustment has been larger and faster than it expected only three months earlier.
- The forecast is measured from each market’s peak: part of the predicted decline is already visible in the data.
- Conditions vary by city and suburb: a national or capital-city average does not describe every local market.
- Rate cuts affect the recovery, not just the downturn: CBA estimates about 2% national growth in 2027 with cuts, versus broadly flat prices without them.
- On-the-ground demand can lead published data: inquiries, open-home attendance and competition appear before purchases settle and enter price indexes.
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What Has CBA Changed in Its Property Forecast?
CBA says housing conditions weakened considerably after its previous forecast update on 3 June. The bank had already expected momentum to slow because of housing-tax changes, higher interest rates and softer sentiment, but it now says the adjustment during the following three months was larger and faster than anticipated.
Its revised forecast is for national dwelling values to fall around 9% from peak to trough. The five-capital-city average is expected to bottom roughly 10% below its latest peak. This is a forecast for the whole cycle, not a prediction that prices will suddenly fall another 9% from today.
1. Sydney and Melbourne Carry the Largest Forecast Falls
CBA expects Sydney to decline about 13% from peak to trough and Melbourne about 12%. Those numbers explain the dramatic media headlines, but Sydney is not a proxy for every Australian market.
Brisbane, Perth and Adelaide are each forecast to fall about 8% from their respective peaks. Even those city-level figures hide major differences between established owner-occupier areas, investor-heavy estates, apartment markets and individual suburbs.
2. A Large Part of the Decline Has Already Happened
By July, national dwelling values were already 2% below their March peak and close to the trough CBA had previously expected only in early 2027. The starting point matters. When a headline quotes a peak-to-trough fall, it combines the decline already recorded with any remaining movement.
CBA’s 28-day rolling data also shows prices weakening before budget night across the capitals, with Perth displaying the steepest post-budget slope in the chart. The updated forecast therefore describes a downturn already in progress, rather than a completely new event beginning now.
3. The Part of CBA’s Report the Headlines Missed
The same report that forecasts the declines also shows every capital-city market beginning to recover by early 2027. CBA expects national values to stabilise and then rise modestly over the year.
That does not mean every property will turn at the same time. It means the bank’s central case is a cyclical correction followed by stabilisation, not an open-ended collapse. Understanding how quickly property data can lag the market is essential when comparing a forecast with conditions buyers are seeing today.
4. The 2027 Recovery Depends on Interest Rates
CBA’s baseline assumes the RBA begins cutting rates in 2027. Under that scenario, the bank estimates national dwelling values could rise about 2% over the year. Without those cuts, CBA estimates prices would be broadly flat.
If rates rise instead, Niro’s view is that the recovery would probably be delayed into the middle or second half of 2027. The key point is that both CBA scenarios discussed in the report, rate cuts or unchanged rates, have the national decline ending rather than accelerating after Christmas.
5. Previous Downturns Have Often Rebounded Quickly
CBA’s Sydney history chart shows several downturns in which prices recovered as quickly as they fell. The April 2020 decline reversed sharply, while the 2022 movement formed a V-shaped recovery. With the exception of the slower 2004 episode, the rebound rate in the examples was generally similar to or faster than the preceding fall.
History cannot identify the exact bottom, but it shows why waiting for absolute certainty can be costly. By the time a recovery is obvious in settled-sales data, competition may already have returned. This is where choosing the right suburbs to invest in matters more than trying to call one national turning date.
What Are Buyers Seeing Before the Data Turns?
Investment Rise is already seeing more people at selected open homes, more property inquiries, more buyer competition and occasional outbidding in certain capital-city pockets and regional markets. These are leading signs, but they do not appear immediately in published price data.
A buyer first makes an inquiry, then negotiates and signs a contract. Settlement can take another six to eight weeks, and the transaction must then be reported and included in the index. Niro estimates that the data seen by the public can be at least three months behind conditions on the ground.
The Verdict: A Correction, Not a Nationwide Crash
CBA’s downgrade confirms that the national market has not yet fully reached its bottom. It does not support the idea of an enormous crash. The bank forecasts stabilisation during 2027, while some local markets may already be turning because buyers respond before that change becomes visible in official figures.
For buyers, the practical response is preparation rather than panic. Assess borrowing capacity, cash flow, supply, owner-occupier demand and suburb-level fundamentals now. The aim is not to guess the exact lowest day. It is to be ready when a suitable property appears in a market with durable growth drivers.
Summary
- CBA forecasts a national peak-to-trough dwelling-value decline of about 9%
- The five-capital-city average is forecast to trough around 10% below its latest peak
- Sydney and Melbourne carry the largest forecast falls at about 13% and 12%
- Brisbane, Perth and Adelaide are each forecast to fall about 8% from their peaks
- By July, values were already 2% below the March peak, so part of the forecast fall has happened
- CBA expects stabilisation and a modest recovery during 2027
- The bank’s baseline is about 2% national growth with RBA cuts and broadly flat prices without them
- Local buyer activity can lead official price indexes by several months
Frequently Asked Questions
There is no single national answer because cities, suburbs and individual properties turn at different times. Buyers should prepare their finance and focus on supply, owner-occupier demand, cash flow and long-term suburb fundamentals instead of trying to identify one exact market-bottom date.
Buyer interest appears before a sale is included in an index. A buyer must inspect, negotiate, exchange and then wait six to eight weeks for settlement before the transaction is reported, so current competition can take several months to appear in published data.
Yes. CBA expects national prices to stabilise and begin a modest recovery during 2027. Its baseline estimate is about 2% growth if the RBA cuts rates, while prices could remain broadly flat if those cuts do not occur.
CBA expects Sydney and Melbourne to record the largest peak-to-trough declines, at about 13% and 12% respectively. Brisbane, Perth and Adelaide are each forecast to fall about 8% from their individual peaks.
CBA expects national dwelling values to fall about 9% from peak to trough in the current cycle. Its five-capital-city average is forecast to bottom around 10% below the latest peak, but part of that decline had already occurred when the forecast was released.
About the Author
Niro Thambipillay
Niro is the founder of Investment Rise, one of Australia’s most trusted property buyers agencies. He has helped hundreds of first-time investors build property portfolios and was voted one of the most trusted Real Estate entrepreneurs in the Asia Pacific region (APAC 2022). Niro is also the author of “How to Build a Property Portfolio That Pays You an Income Every Month.”
