“Affordability remains a significant challenge for many Australians, and these findings suggest many view lower prices as part of the solution,” Westpac executive Carolyn McCann said. A Westpac survey of 1,165 Australians found that 68 per cent believe falling house prices are good for the country, Nine reported. However, 67 per cent of those surveyed also stated they would be worried if property values continued to drop.
Home ownership out of reach for 82 per cent of Australians
The Westpac Home Ownership Report indicates a deep divide in the market. While 82 per cent of respondents believe home ownership is “completely out of reach” for the average person, the desire for lower prices varies by generation. The Westpac Home Ownership Report reports that Gen Z is the most supportive of price drops at 78 per cent, followed by Millennials (69 per cent), Gen X (67 per cent), and Baby Boomers (58 per cent).
The anxiety over falling values is most acute among those already in the market. According to the Westpac Home Ownership Report, 75 per cent of homeowners with a mortgage are concerned about declining property values, as the home often represents their largest financial asset.
Did you know? 65 per cent of first home buyers believe they will never be able to purchase a property without receiving an inheritance, according to Westpac research.
Capital city prices fall for first time in 15 years
The broader market is reflecting this volatility. ABC News reports that every Australian capital city has seen median house prices decline for the first time in 15 years. The overall housing market fell 4.7 per cent in the most recent quarter, which ABC notes is the steepest quarterly drop on record.
The downturn is not uniform across all suburbs. The Sydney Morning Herald reports that while the typical Sydney house fell 5.8 per cent over the year to $1,661,167, some areas saw sharper declines. Marsfield experienced a 22 per cent drop in the 12 months to September, and Bronte fell 15.2 per cent, according to the Domain House Price Report.
| Sydney Suburb | Price Change (Annual) | Current Median |
|---|---|---|
| Marsfield | -22% | $1,485,000 |
| Bronte | -15.2% | $5,235,000 |
Regional South Australia resists national trend
While capitals decline, regional South Australia has remained a growth outlier. ABC News reports that prices outside Adelaide rose 19 per cent in the past 12 months, with a median price of $595,000. Proptrack data shows regional SA prices nearly doubled over the previous five years.
However, this growth may be peaking. Naracoorte real estate agent Margot Shortt told ABC that enquiries have “absolutely fallen off a cliff,” noting a 99 per cent decline in interest following the RBA’s decision to lift interest rates to a 15-year high in late September.
Political friction over interest rates and spending
The federal government faces a precarious balance between affordability and asset stability. Nine reports that Labor has seen voter support drop to levels seen during the Gillard government following a May budget that pushed down property values.
Liberal MP Andrew Wallace attributed the current economic pressure to government spending, telling Nine’s Weekend Today that Prime Minister Anthony Albanese is like “an arsonist complaining about getting his fingers burnt.” Albanese has since described interest rates as a “blunt instrument” in interviews with the Sydney Morning Herald and The Age.
Market Insight: Ray White chief economist Nerida Conisbee told the Sydney Morning Herald that the scattered nature of price falls indicates the downturn has become “entrenched” due to the combined impact of inflation, rate rises, and budget changes.
Future outlook for property values
Despite current declines, some analysts see a recovery. Westpac economists expect national property prices to rise by 3 per cent in 2027, according to the Westpac Home Ownership Report. Adelaide University housing economist Chris Leishman told ABC News that while a correction is necessary, Australian markets typically do not crash. He expects prices to continue falling for another six to 12 months before rising again in the long term.
Housing Market FAQ
Why are some Sydney suburbs rising while others fall?
While the general trend is down, the Sydney Morning Herald reports that outer western suburbs like Prospect and Richmond, and the inner west suburb of Haberfield, all saw price increases of more than 23 per cent.
What factors besides house prices affect affordability?
According to Westpac, Australians identify more affordable housing in established suburbs (52 per cent), reduced stamp duty and other purchasing costs (48 per cent), and higher incomes and wage growth (39 per cent) as key solutions.
What is the RBA’s current trajectory for interest rates?
Nine reports the Reserve Bank of Australia is positioned to raise interest rates for the fifth time in 2026, potentially taking the cash rate to 4.85 per cent to combat inflation.
“We have seen probably a 99 per cent decline in enquiries,” Margot Shortt told ABC News.
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