RBA Warns of Economic Slowdown Amid Housing Market Decline

The Reserve Bank of Australia (RBA) has released its updated set of forecasts, which show that Australia's economic growth is expected to slow down due to a weakening housing market. The bank predicts that GDP growth will ease below two percent in 2026, which will help bring inflation back down towards the RBA's target range of 2-3 percent.

The RBA attributes this decline in economic growth to the declining housing prices, which have already fallen by 1.6 percent since their peak in March. The bank also expects a further decline in property prices, with ANZ Bank economists doubling their expectations for a 10.6 percent drop from the peak of prices to the trough in capital cities during 2026 and 2027.

Sydney is expected to lead the way down, with a predicted loss of 14.5 percent, slashing nearly $190,000 off median values. The RBA notes that lower housing prices will weigh on consumption by reducing household wealth and also lower economic activity through reduced turnover of homes.