Australia’s housing market is bracing for a deeper downturn, with HSBC warning national property prices could slide by as much as 8% amid a sharp correction driven by weakening investor demand and rising borrowing costs.
House prices are now falling at their fastest pace since 2022. National home values dropped 0.4% in June, but the steepest declines were recorded in Sydney and Melbourne. Sydney fell 1.2% over the month and 3.2% across the quarter, according to Cotality, while Melbourne slipped 1% in June and 2.6% over the quarter.
HSBC chief economist Paul Bloxham said recent tax policy changes targeting investment properties combined with the Reserve Bank’s three earlier rate hikes have “rapidly sapped investor demand.” The bank’s central forecast expects prices to fall through the second half of 2026 and decline a further 2-6% in 2027, implying a total correction of up to 8%.
Bloxham warned the June figures suggest risks are “tilted to the downside,” adding: “Hold on to your hats.”
With Sydney and Melbourne leading the downturn, analysts say the national slide is “just the beginning,” as tighter credit conditions and reduced investor appetite ripple across the country.
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