Why Australian property prices could go backwards by 2030

Australian property prices could fall backwards by 2030, with housing supply and jobs figures key determinants for the health of the country’s housing market.

If unemployment rises to 4.6 per cent by mid-2030, alongside three additional rate rises (on top of the two already made this year) and medium supply growth, Australian average dwelling prices could fall by 11 per cent by 2030 from the December 2025 quarter. That is according to new modelling from Money.com.au, conducted by Primara Research.

Australia’s housing market now shows signs of divergence. Nationally, dwelling values rose over the first quarter of 2026, driven by strength in mid-size capital cities such as Perth. But Melbourne and Sydney values have fallen, as high prices and inflation drive potential buyers out of the market.

Under Primara’s “most probable” scenario, Australia’s national average dwelling value will rise by about 4.9 per cent from December 2025 to $1,127,000 by June next year but will then fall 15.4 per cent from that peak to $953,000 by the end of 2030.

“The December 2023 average dwelling price figure was $949,000, and then in March 2024 it was $962,000, so the predicted figure for the end of 2030 sits in between those,” said Peter Drennan, head of research and data at Primara.

“So, that suggests that anyone from the start of 2024 onwards will have theoretically bought at a price that now could be higher than the $953,000 projected price.”

Primara’s model for the “most probable” scenario takes housing supply as its biggest lever, with medium supply matching the most recent quarter of growth. But it views unemployment as the “more statistically reliable predictor of dwelling price changes”, Drennan said in a research note.

In the worst-case scenario, falls could be far deeper, but only in extreme, sustained conditions, the researchers said.

According to Primara analysis of ABS data, Australia experienced only two meaningful corrections in 14 years. In 2022, prices fell 4.3 per cent over six months, and in 2019, five consecutive quarters of falls totalled 6.3 per cent.

Australia’s major banks have differing outlooks, with the latest forecasts spanning price growth nationally across 2026. One lender has capital cities combined at 2.8 per cent; another has that at 5.3 per cent.

Trent Saunders, Commonwealth Bank of Australia senior economist, said the bank did not expect price falls.

He said a range of factors could affect house prices, including labour market conditions.

But, typically interest rates and an underlying supply-demand imbalance held a larger sway, he said.

“So based on that, our outlook for pricing is for a slowdown over the next two years.”

CBA’s forecast is for national dwelling prices to increase by 5 per cent this year and then 3 per cent over 2027.

“This is a noticeable slowdown from where we were last year, so at least around an 8½ per cent growth that we saw last year,” Saunders said.

“But we’re not expecting price falls.”

The reason why CBA doesn’t see dwelling price declines ahead, Saunders said, was because there was still a “strong fundamental basis” for property.

“We’re still working through the effects of past undersupply, and the rental market remains very tight, so price growth is expected to slow, but because there is all of that pent-up demand, we don’t expect that prices will decline over the next couple of years at least,” he said.

ANZ has lowered its capital city housing price forecasts and expects prices to grow 2.8 per cent in 2026 and 2.1 per cent in 2027.

“Higher interest rates and weak confidence are likely to weigh on Australia’s housing market,” it said in a recent research note. “Sydney and Melbourne markets are showing signs of slowing, and we expect them to underperform in 2026.

“We expect to see the sharpest slowdown in prices in Sydney and Melbourne, with small falls in housing prices in 2026.”

Dr Shane Oliver, AMP’s chief economist, had assumed house price growth nationally of about 5 to 6 per cent over the next five years but said this forecast “with respect to the next six to 12 months was looking more and more shaky by the day”.

Factors include “this adverse combination of higher rates from the RBA, and likely somewhat higher unemployment as a result of weaker growth or possible recession flowing from the war”, Oliver said.

“It looks like we’ll have another cyclical downswing; in fact, Sydney and Melbourne already are seeing modest price falls. The market’s been held up by the three mid-sized cities of Brisbane, Adelaide and Perth, but even there price growth is now slowing.”

Primara’s forecast for a June 2027 peak assumes conditions play out gradually. But it could arrive sooner, depending on the pace of unemployment rises and interest rate rises, and supply levels, Drennan said.

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