Treasury's House Price Forecast Under Fire from Economists, Banks

Treasury's forecast that investor tax changes will shave only 2% off national house prices over two years is being disputed by economists, banks, and the Coalition. According to fresh data, national home values fell for a fifth straight month in August, down 3.6% from their peak. Sydney's slide, now 7.1%, outpaces the depth of the 2022-23 correction driven by 425 basis points of Reserve Bank of Australia (RBA) rate hikes.

The opposition is calling for transparency on Treasury's modelling, with Labor's housing spokesman Andrew Bragg trashing it as 'not worth the paper it's written on'. Former Treasury economist Peter Downes has also expressed skepticism, arguing that rising global real interest rates are the bigger driver of the current downturn rather than the tax changes alone.

CBA downgraded its housing forecast to a 9% peak-to-trough national fall, with senior economist Trent Saunders noting 'the adjustment over the past three months has been larger and faster than we anticipated'. AMP chief economist Shane Oliver's independent modelling sits closer to CBA's than to Treasury's.