Westpac Home Price Forecast 2026: Over 10% Fall Tipped

Westpac has sharply downgraded its outlook for Australian housing, now forecasting national home prices to fall about 8 per cent in calendar year 2026 and just over 10 per cent peak-to-trough this cycle. If it plays out, the bank says it would be the largest decline since national price measures began in 1980, though inflation-adjusted falls were steeper in earlier recessions.

A note of caution on what this is: these are Westpac's forecasts, not facts. Bank forecasts are revised constantly, and this is one bank's call. The underlying October 2026 Market Outlook is client-gated, so the figures below are reported via trade press coverage on October 15 (Mortgage Professional Australia and Australian Broker, both KeyMedia titles), not taken from the note itself. The two direct quotes are the exception; they were published verbatim in both outlets.

The forecast in detail

Westpac expects national home prices to fall about 8 per cent across calendar 2026, with the total peak-to-trough fall this cycle reaching just over 10 per cent. Sydney is forecast to record the steepest fall of the major capitals in 2026, down 12 per cent, followed by Melbourne down 8 per cent, Brisbane down 4 per cent, and Perth and Adelaide down 2 per cent each.

That is a genuinely bleaker call than the one Westpac made just three weeks earlier. In its September 2026 Housing Pulse, published on September 25, the bank had tipped only a 7.3 per cent peak-to-trough fall, with Brisbane, Adelaide and Perth still recording small gains of 2 to 3 per cent in calendar 2026 (Hobart was up 4 per cent in that call). Brisbane, Adelaide and Perth have now all been flipped into forecast falls. The forecasts have clearly worsened, and quickly.

For context on how this correction began, see our overview of Australia's housing downturn in 2026.

The rate story behind the call

Westpac's grim housing outlook rests on a grim rates outlook. The RBA raised the cash rate target by 25 basis points to 4.60 per cent on September 29, the fourth hike of 2026, taking a full percentage point of tightening through the year from 3.60 per cent in January.

Westpac expects the Board to go again in November, lifting the cash rate to a cycle high of 4.85 per cent. The bank does not expect the rate-cutting phase to begin until August 2027, with the cash rate holding at 4.85 per cent until mid-2027. The next decision is announced at 2:30pm on Tuesday, November 3.

Luci Ellis, chief economist of Westpac Group, wrote in the outlook: "The Monetary Policy Board will want to see clear evidence of inflation coming down before withdrawing policy restrictiveness." That is the language of a board in no hurry to cut.

This article is about the bank's forecast, not a preview of the November decision itself.

What has already happened, versus what Westpac forecasts

It helps to separate observed reality from the forecast. Cotality's September Home Value Index shows national home values fell 1.1 per cent in September, the sixth straight monthly fall, leaving the national market 5.2 per cent below its March 2026 peak. Estimated home sales over the past three months tracked 19.1 per cent below year-ago levels.

Westpac's head of Australian Macro-Forecasting, Matthew Hassan, wrote in the outlook: "That risk is crystallising with turnover already down 20% and prices off 8%." The sales figure lines up closely with the observed 19.1 per cent decline. The price figure, though, looks like Sydney rather than the nation: Sydney dwelling values are 8.6 per cent below their February 2026 peak, versus 5.2 per cent nationally. Sydney is Westpac's forecast worst performer for the year ahead, so its current drawdown being the reference point makes sense.

What this means for buyers

A forecast of a 10 per cent-plus peak-to-trough fall sounds like a signal to wait, but it needs two caveats. First, about half of the forecast national fall has arguably already happened in some markets: Sydney is already 8.6 per cent below its peak. Second, this is one bank's call and it changed materially in three weeks, which tells you how uncertain the path is.

For buyers, the practical points are the same ones we covered in our Brisbane buyer's market piece. Borrowing capacity is the binding constraint while the cash rate sits at 4.60 per cent and may rise again in November. If you find the right home at a price your budget handles comfortably even with one more rate rise, that matters more than trying to time the exact bottom, which no economist will pick precisely.

Longer selling times mean you can insist on building and pest inspections and negotiate on price. Target the segments under the most pressure rather than blue-chip pockets, which are holding up better.

What this means for sellers

For sellers, the direction of the bank's call is the warning. Westpac now expects falls in every major capital in 2026, including cities it had tipped for gains just last month. In a falling market, the overpriced listing does not hold its value; it chases the market down.

Price realistically from day one. An early, realistic offer today is often better than a lower one three months from now, particularly with another potential rate rise landing in November. Present the property at its best: with buyers spoiled for choice and taking longer to decide, anything tired or poorly presented sits.

Frequently Asked Questions

What did Westpac forecast for Australian home prices?

Westpac's October 2026 Market Outlook forecasts national home prices to fall about 8 per cent in calendar year 2026 and just over 10 per cent peak-to-trough this cycle, which the bank says would be the largest nominal decline since national price measures began in 1980.

Which city is forecast to fall the most?

Sydney, down 12 per cent in calendar 2026, the steepest fall of the major capitals. Melbourne is forecast down 8 per cent, Brisbane down 4 per cent, and Perth and Adelaide down 2 per cent each.

How does this compare to Westpac's previous forecast?

It is markedly worse. The September 2026 Housing Pulse tipped only a 7.3 per cent peak-to-trough fall, with Brisbane, Adelaide, Perth and Hobart still forecast to record gains in 2026. The October call flipped Brisbane, Adelaide and Perth to forecast falls.

What does Westpac expect the RBA to do next?

Westpac expects another 25 basis point hike in November, taking the cash rate to a cycle high of 4.85 per cent, and does not expect rate cuts to begin until August 2027. The next RBA decision is announced at 2:30pm on Tuesday, November 3.

Should I wait for prices to fall before buying?

Westpac's forecast is one bank's call and forecasts are revised constantly, so do not treat it as fact. If you are buying a home to live in and the repayments are comfortable even if rates rise once more, buying into a cooling market offers less competition and real negotiating power. Timing the exact bottom is not reliably possible, even for the banks.

This article summarizes a bank forecast reported via trade press as of October 2026. Forecasts are not facts, and nothing here is financial advice.