Australia's biggest bank has sharply deepened its view of the housing downturn in under two months. Commonwealth Bank now expects national dwelling prices to fall about 14% from peak to trough, up from 9% in September, with Brisbane and Perth tipped to drop 18%. Coming on the day the RBA lifted rates again, the revision matters for anyone holding property, and for how investors think about gains, losses and the tax rules due in July 2027.

What CBA is now forecasting

CBA now expects national dwelling prices to fall about 14% from peak to trough, and the five-capital-city average to fall about 15%.

The bank's city-by-city forecasts are:

  • Brisbane: down 18%
  • Perth: down 18%
  • Sydney: down 16%
  • Melbourne: down 13%
  • Adelaide: down 13%

If the national forecast proves right, more than half of the peak-to-trough decline would still be ahead, given values are already 6.7% below their peak.

These are forecasts as summarised in media coverage, not outcomes. Forecasts of this kind are often revised, as this one has been.

How far the view has moved since September

On 9 September, CBA was forecasting a 9% national fall. At that time it expected Melbourne to fall 12% and Perth 8%.

The Perth forecast has therefore more than doubled, from 8% to 18%. Melbourne's has moved only slightly, from 12% to 13%.

That shift fits the pattern in recent data. Cotality's October index showed Brisbane recording the fastest monthly fall of the capitals at 2.0%, with Perth down 1.7%. Cotality's Tim Lawless said the mid-sized capitals "are now well and truly in a correction" and that buyers "are noticeably absent".

The speed is notable too. Cotality said combined Capital city values have fallen 8.1% over seven months, the fastest pace in 40 years of data, compared with a 7.0% fall over the same period of the 2022–23 downturn. Over the year, sales volumes are down 30% in Sydney and 29% in Brisbane.

National values are already 6.7% below their March peak. On Cotality's numbers, that is about $63,400 off the median dwelling.

The rate and jobs backdrop

CBA's revised forecast came as the Reserve Bank lifted the cash rate by 25 basis points to 4.85%, on a six to three vote.

The RBA's statement said "housing prices have fallen significantly and the Unemployment rate has risen". It flagged "uncertainties about the extent and economic effects of the downturn in the housing market".

The board said "a further tightening in financial conditions is warranted". CBA expects the cash rate to hold at 4.85% from here, with cuts in August and November 2027.

CBA also expects unemployment to rise to 5.1% and annual growth to slow to 1.0% by mid-2027.

That jobs outlook matters for how deep a downturn becomes. Challenger's Jonathan Kearns said that widespread Mortgage defaults are unlikely while unemployment stays low and most borrowers have equity, but that Job loss is the main trigger.

Hypothetical example: what a 14% fall looks like

Hypothetical example: Take a property worth $800,000 at the March peak.

A 6.7% fall, roughly where national values sit now, would take it to $746,400. A 14% peak-to-trough fall would take it to $688,000. That is a further $58,400, or about 7.8%, below today's level.

If the same property were in Brisbane or Perth and fell the 18% CBA expects for those cities, it would be worth $656,000, or $144,000 below its peak.

Now suppose an investor paid $750,000 for that property, including purchase costs, and sold it at $688,000. Broadly, that would produce a capital loss of about $62,000, though the exact figure depends on cost base adjustments such as previously claimed capital works deductions.

Under long-standing rules, a capital loss can only be offset against capital gains, not against salary or other income. Unused capital losses can be carried forward to future years. The practical value of a loss therefore depends on whether the investor has, or later makes, capital gains to apply it against.

This is a simplified illustration and does not reflect any particular property or market.

Where the tax changes fit

The forecast lands as investors adjust to changes legislated in the Treasury Laws Amendment (Tax Reform No. 1) Act 2026.

From 1 July 2027, cost-base indexation plus a 30% minimum tax replace the 50% CGT discount for gains accruing from that date. Negative gearing is limited to new builds for properties bought after 7:30pm AEST on 12 May 2026, with existing holdings grandfathered.

For buyers of established homes after the cut-off, that means a falling market arrives alongside the loss, from 1 July 2027, of the ability to offset rental losses against wage income. Owners of grandfathered properties keep the existing treatment.

The new-build Carve-Out puts a spotlight on supply. ABS figures for September show private house approvals fell 5.3% to 10,432, which the ABS's Daniel Rossi described as "the largest since August 2025". Rossi added it was still "the ninth consecutive month where more than 10,000 private sector houses" were approved.

Private dwellings excluding houses rose 16.6% to 6,579 in seasonally adjusted terms, but were down 20.5% on a year earlier. Apartment approvals rose in original terms, up 25.6% to 4,129.

Higher rates and falling prices are expected to weigh on dwelling investment, the RBA said, which could limit the pipeline of new homes that remain eligible for negative gearing.

Key dates to watch

  • 4 November: RBA Chart Pack.
  • 5–6 November: Senate committee hearings on the Tax Reform No. 3 Bill, which defines a "new residential dwelling", with a report due 13 November.
  • 25 November: the next monthly CPI, a key input for future rate decisions.
  • December: the federal government's mid-year budget update.
  • 1 July 2027: the new CGT and negative gearing settings begin.
  • Mid-2027: the point by which CBA expects unemployment to reach 5.1%.

Price forecasts are uncertain and can change quickly.