A generation of would-be homeowners desperately waiting for property prices to tank in 2027 are facing an uncomfortable truth: the crash they’re counting on might not happen, experts warn.
Rising interest rates and recession anxiety are fuelling fresh speculation about whether Australia’s relentless property market is heading for it’s long-awaited fall.
A number of experts claim that despite this, two aspects will keep Australia’s prices high, regardless of increasing interest rates and a potential recession.
Dale Gillham, founder and chief analyst at Wealth Within said although it was a compelling argument, Australia’s chronic housing shortage and what drives the crisis would keep prices elevated.
“Everywhere you look right now, the narrative feels the same. Interest rates are high, inflation has squeezed households, AI is raising job concerns, and recession fears are creeping back into the headlines,” he said.
Wannabe homeowners waiting for the market to crash could be out of luck. Picture: Rohan Kelly
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“On the surface, it sounds like the perfect set up for a property crash. If people are under pressure, surely, they won’t be able to hold onto their homes.”
Mr Gillham said it doesn’t fully reflect what was actually happening, which comes down to supply and demand.
High migration and construction delays were currently overriding “traditional economic gravity” that were therefore keeping property values high, he said.
For property prices to fall significantly, you typically need either a collapse in demand or a surge in supply.
“Right now, neither is happening in Australia,” Mr Gillham said.
“Demand remains strong, migration continues to fuel the population, meaning more people need housing.
“At the same time, unemployment has stayed relatively stable, so most homeowners are still earning an income and servicing their mortgages.”
Dale Gillham, founder and chief analyst at Wealth Within. Photo: Supplied
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Additionally, demand for housing has not disappeared while there is still a supply shortage.
The Australian Government agreed to the National Housing Accord – to keep up with demand and increase supply – to build 1.2 million over a five-year period from mid-2024.
Those targets are already falling short, with data from the Urban Development Institute of Australia (UDIA) showing the nation is unlikely to meet the target by the end of the decade, forecasting a national dwelling shortfall of 380,000 homes by 2030.
Driven by high construction costs and persisting labour shortages, many developers are also being hit as projects become less financially viable.
Ray White Group Chief Economist Nerida Conisbee also said Australia’s property market would continue to be resilient.
Open home numbers showed some heat was taken off the market after rate rises, yet not enough to see a complete downturn or crash due to major issues construction issues.
Ray White chief economist Nerida Conisbee. Photo: Supplied
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“Construction costs are likely to see stronger growth now, they began to increase towards the end of last year and with the Middle East conflict that will really impact the supply chain and access to a lot of building materials,” she added.
Ms Conisbee said interstate migration was also putting pressure on markets.
“More people means more demand for housing, it’s not all overseas migration, a lot of it is interstate migration, that’s harder to control because we can restrict international migrants but we can’t stop interstate migration,” she said.
“The other thing with housing shortages is we don’t have enough trades, we need to bring them in from overseas we need more workers, but those workers need homes to live in, no one has been able figure out that issue.”
While Ms Conisbee acknowledged a recessions could happen, with the ongoing the conflict in the Middle East made it uncertain and it was unlikely to topple rising house prices.
“We are better positioned than other countries as we export gas, but inflation is rising,” Ms Conisbee said.
“A recession could happen, but at this point we don’t know when the Middle East conflict will end is the big unknown, even if it does end soon it will take a long time for supply chains to come back in the country.”
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