“That puts this low between the June quarter 2027 and the June quarter 2028, most likely around the September quarter 2027,” a report detailing the ABS analysis said.
The Australian Bureau of Statistics released lending indicator data on Wednesday showing both the volume and value of new home loans fell by 15 per cent in the September quarter, marking the largest quarterly drop since records began in 2002. Analysis from Money.com.au and Primara Research indicates that three consecutive quarters of falls in lending activity have coincided with every national price downturn since 2008.
Home values have historically bottomed out nine to 21 months after such a streak, pointing to a market low between June 2027 and June 2028.
“The peak is behind us, so now we can start looking for the low. On past form, that’s about 12 months away,” said Sarah Walwyn, general manager of home loans at Money.com.au, told Real Estate.
Major Bank Forecasts
Australia’s major banks have revised their home price forecasts downward following the Reserve Bank of Australia’s interest rate hike in November. The Commonwealth Bank of Australia is predicting a peak-to-trough fall in national prices of about 14 per cent, estimating the market peaked in early 2026 and will bottom out in mid- to late-2027 without a sharp rebound.
ANZ is tipping a cumulative fall of 7 to 14 per cent, expecting prices to stabilise in late 2027 as the RBA begins easing rates.
Meanwhile, Westpac forecasts a total 10 per cent drop across the downturn, and the National Australia Bank predicts a roughly 7 per cent peak-to-trough fall.
Westpac reported that construction lending has fallen 30 per cent as high costs deter new housing projects. Higher construction, labour, and material costs meant builders constructed only 5,300 apartments and townhouses this year, down from 8,000 in the previous year, according to Westpac housing data cited by SBS.
“Sellers take time to accept lower prices, so the low comes around a year later,” the group told The Daily Telegraph.
Investor and Buyer Impact
The record fall in lending was driven by steep declines in both investor and first-home buyer purchases. Investor loans suffered their largest drop on record, plunging 31 per cent over the quarter, while first-home buyer loan commitments fell by 9 per cent.
Property Investment Professionals of Australia chair Cate Bakos argued that government policy changes regarding negative gearing and capital gains tax failed to deliver on Treasury promises.
“Federal Government’s supposed intention to encourage more first home buyers into the market, by axing longstanding investor taxation policies, has failed spectacularly,” Ms Bakos told Real Estate.
“It’s clear that the new policy settings have torpedoed investor activity and will result in fewer rental properties and higher rents in the months ahead.”
Minister for Housing Clare O’Neil defended the data, stating the balance was shifting back toward owner-occupiers after a generation of markets geared toward investors. Opposition housing spokesman Andrew Bragg criticized the figures, arguing that fewer loans mean the housing system is shrinking and will not improve affordability.
“decimated confidence in the property market,” valuations group Herron Todd White said.
What Caused the Fall in Home Loans
* What caused the record fall in home loans?
The drop was driven by a combination of interest rate rises, higher construction costs, and government tax reforms that caused investor loan commitments to fall by 31 per cent in the September quarter.
* When is the housing market expected to recover?
Major banks and research firms predict the national housing market will bottom out between mid-2027 and mid-2028, with stabilization dependent on future interest rate cuts by the RBA.
* How have major banks adjusted their price predictions?
CBA anticipates a peak-to-trough fall of about 14 per cent, ANZ projects a 7 to 14 per cent drop, Westpac forecasts a 10 per cent decline, and NAB expects a 7 per cent fall.