CBA CEO Predicts Australian Housing Market Won’t Recover Until 2027

The head of Australia’s largest bank, Commonwealth Bank of Australia (CBA), has predicted that the country’s housing market will not hit bottom until well into 2027. This forecast comes as property prices have declined for six straight months, driven by rising interest rates and recent tax policy changes that have dampened investor confidence.

Data from Cotality shows that national property values have fallen 5.2 per cent since their peak in March. The declines have been most severe in Sydney and Melbourne. CBA CEO Matt Comyn acknowledged the impact on household wealth but noted that similar downturns have occurred in the past. He emphasized that while house prices are closely watched, given that they represent the bulk of Australian household assets, prices had risen roughly 60 per cent over the past seven years.

CBA economists had previously forecast a 9 per cent drop in property prices before the September interest rate hike, a prediction that Comyn reiterated. However, he cautioned that the final outcome would depend on future decisions by the Reserve Bank of Australia. The bank plans to revisit its forecast after the release of quarterly inflation data in November.

Last month, major capital cities saw significant declines, with Brisbane experiencing the steepest drop at 1.5 per cent, followed by Sydney at 1.4 per cent. Adelaide and Perth also saw decreases of 1.3 per cent and 1.2 per cent, respectively. According to Cotality’s research director Tim Lawless, 97 per cent of suburbs in major capital cities saw price declines over the three months ending in September.

The downturn has been exacerbated by Labor’s proposed tax changes, including limiting negative gearing to new builds and properties purchased before the budget announcement. Additionally, the government’s plan to reduce the capital gains tax discount to a minimum 30 per cent rate has further discouraged investors.