RBA Downgrades GDP Growth Forecast as Housing Market Weakens

The Reserve Bank of Australia (RBA) has downgraded its GDP growth forecast for 2026, citing weaker housing market conditions as a major contributor to the decline.

According to the RBA's Statement on Monetary Policy, released on Tuesday, property prices have already fallen by 1.6% since their March peak and are expected to continue declining gradually due to tightening monetary policy, tax changes, and global uncertainty.

The bank expects GDP growth to ease below 2% in 2026, which will help get inflation back down towards the RBA's target range of 2-3%. Both headline and underlying inflation are forecast to return to the bank's point target of 2.5% by early 2028.

ANZ Bank economists have also doubled their expectations for how far property prices will fall in 2026, predicting a 10.6% decline from peak to trough in capital cities during 2026 and 2027.