Invest
CBA forecasts 10% house price drop for 2023
The Commonwealth Bank is the most negative of the majors on property prices.
CBA forecasts 10% house price drop for 2023
House prices across Australia’s capital cities are set to fall by 10 per cent in 2023, according to the latest forecasts from the Commonwealth Bank.
CBA has predicted price falls of 12 per cent in Sydney and Hobart and 10 per cent in Melbourne and Canberra in 2023.
Prices in Perth are expected to fall 9 per cent, while drops of 8 per cent are predicted for Brisbane, Adelaide and Darwin.
By the end of this year, CBA said property prices will have risen by 22 per cent, putting the Australian housing market in what it described as “the twilight of an incredible boom”.
The bank expects prices will rise a further 7 per cent in 2022 before falling in 2023 in response to rising interest rates.
“A gradual and shallow RBA tightening cycle that takes the cash rate to 1.25 per cent by Q3 2023 lies at the heart of our expectation that home prices will contract over 2023,” said CBA head of Australian economics Gareth Aird.
CBA’s forecasts for 2023 were significantly lower than those released by ANZ last week.
According to ANZ, average capital city house prices are expected to fall 4 per cent in 2023 after a rise of 6 per cent in 2022.
Westpac’s latest property outlook released last month was also less pessimistic than CBA, with a predicted fall of 5 per cent in 2023.
Mr Aird noted that the context of its predicted fall needed to be considered.
“Price rises have been exceptional over 2021 and further gains are forecast in 2022,” he said.
“A decline in national dwelling prices of 10 per cent in 2023 on our figuring simply takes prices back to where they were in Q3 2021.”
CBA has predicted that the first interest rate rise by the Reserve Bank will take place in November next year to 0.25 per cent before a further rise in December to 0.50 per cent.
Additional rate rises of 25 basis points are expected to take place in the first, second and third quarter of 2023, bringing the cash rate to 1.25 per cent.
“Rising rates will put downward pressure on the demand for credit which will result in dwelling prices correcting lower,” said Mr Aird.
“Indeed rising rates work in much the same way falling interest rates generate an increase in demand for credit and higher home prices.”
Mr Aird said that the path of interest rates was the main risk to its long-term forecasts.
“If the RBA tightens policy more aggressively and/or earlier than our forecast profile for the cash rate, we would expect dwelling prices to fall by more than our central scenario,” he said.
“Equally, if the RBA tightens policy later than we anticipate or delivers a more shallow tightening cycle, we would expect a smaller decline in home prices in 2023.”
Meanwhile, macro-prudential measures present a near-term risk, with smaller rises anticipated in 2022 if the Australian Prudential Regulation Authority introduces new policies or an additional increase to the serviceability buffer.
RELATED ARTICLES
Property
Hidden cost, higher prices: Why a council fee fight matters for Australia’s housing pipeline
A dispute between the Housing Industry Association and Goulburn Mulwaree Council over development cost estimates is more than a local skirmish—it spotlights a systemic pricing lever that can compound ...Read more
Property
Why Aussie homes are turning into stepping stones for the new generation
A new cohort of buyers is treating their first property as a launchpad, not a destination—and the mortgage industry is pivoting in lockstep. Read more
Property
Rate cuts ignite an upsizing wave: how to win the next phase of Australia’s housing cycle
Cheaper money is reviving borrowing capacity and confidence, and upsizers are back in force — most visibly at auctions where clearance rates have lifted to yearly highs. The ripple effects extend ...Read more
Property
Rate anxiety fades, affordability bites: What Australia’s property market shift means for business
Australian buyers are no longer driven primarily by interest rate fears; the binding constraint is affordability. New research shows price pressure, not policy moves, is shaping behaviour—forcing ...Read more
Property
South Australia's first-home buyer boom fuels a frenzy for lenders, builders and retailers
South Australia has quietly become the nation’s most active first‑home buyer market, fuelled by falling rates, generous state incentives and a responsive broker ecosystem. Read more
Property
Melbourne’s turning point: the 2025 playbook for investors—and the 2026 upside
After lagging other capitals, Melbourne is quietly moving off the floor. Prices have logged several consecutive months of growth, rental markets remain tight, and forecasts point to a sharper upswing ...Read more
Property
Brisbane hits the million-dollar mark as growth takes a detour and investors eye new opportunities
Brisbane has crossed the symbolic $1 million median for houses, but the more investable momentum is in units—and the growth curve is flattening. Read more
Property
North platform adds household reporting feature to boost adviser efficiency
AMP's North platform has launched consolidated household reporting across multiple client accounts, helping financial advisers streamline their client review processes. Read more
Property
Hidden cost, higher prices: Why a council fee fight matters for Australia’s housing pipeline
A dispute between the Housing Industry Association and Goulburn Mulwaree Council over development cost estimates is more than a local skirmish—it spotlights a systemic pricing lever that can compound ...Read more
Property
Why Aussie homes are turning into stepping stones for the new generation
A new cohort of buyers is treating their first property as a launchpad, not a destination—and the mortgage industry is pivoting in lockstep. Read more
Property
Rate cuts ignite an upsizing wave: how to win the next phase of Australia’s housing cycle
Cheaper money is reviving borrowing capacity and confidence, and upsizers are back in force — most visibly at auctions where clearance rates have lifted to yearly highs. The ripple effects extend ...Read more
Property
Rate anxiety fades, affordability bites: What Australia’s property market shift means for business
Australian buyers are no longer driven primarily by interest rate fears; the binding constraint is affordability. New research shows price pressure, not policy moves, is shaping behaviour—forcing ...Read more
Property
South Australia's first-home buyer boom fuels a frenzy for lenders, builders and retailers
South Australia has quietly become the nation’s most active first‑home buyer market, fuelled by falling rates, generous state incentives and a responsive broker ecosystem. Read more
Property
Melbourne’s turning point: the 2025 playbook for investors—and the 2026 upside
After lagging other capitals, Melbourne is quietly moving off the floor. Prices have logged several consecutive months of growth, rental markets remain tight, and forecasts point to a sharper upswing ...Read more
Property
Brisbane hits the million-dollar mark as growth takes a detour and investors eye new opportunities
Brisbane has crossed the symbolic $1 million median for houses, but the more investable momentum is in units—and the growth curve is flattening. Read more
Property
North platform adds household reporting feature to boost adviser efficiency
AMP's North platform has launched consolidated household reporting across multiple client accounts, helping financial advisers streamline their client review processes. Read more
