An economist has warned house prices could plunge by up to 40 per cent in some suburbs as Australia faces a record-breaking housing correction and looming recession.
With four interest rate rises already in the books in 2026 and another potentially on the way, an economist said the Australian housing market was teetering on the edge of its largest-ever downturn.
Coolabah Capital Investments founder and chief investment officer Chris Joye said the market’s current trajectory could see house prices plummet by up to 40 per cent in some suburbs at the market downturn's deepest point.
“It’s going to be an absolute disaster. We’re going into a recession; we’re having the mother of all housing corrections,” Joye said on a recent podcast.
With property prices already declining in 97 per cent of housing markets nationwide, Joye said the downturn would see values drop by double digits across the country.
Joye forecast a national peak-to-trough fall of about 13 per cent, with prices declining at an annual rate of 16 per cent.
According to Joyce, Sydney would likely see the biggest drop in value, with house prices falling by as much as 20 to 40 per cent.
“We’ll break the record for the biggest ever fall in house prices on our numbers before Christmas."
Recession on the horizon
With values likely to fall by double digits across the country, Joye said the property slump could also be accompanied by a recession.
He said unemployment could also jump significantly, with many small businesses likely “to go bust”.
According to Joye, a recession would likely change the retirement and wealth generation plans of Australians heading into the latter stages of their lives.
“There’ll be adversity, and your house is not going to be worth as much as it was, and your super’s probably not going to be worth as much as you thought it was going to be worth, and you’re going to have to work a little longer. Maybe you won’t retire when you thought you were going to.”
Despite ongoing tension and conflict in the Middle East being cited as a major influence on the high inflation, Joye said the actual driver was closer to home.
He said inflation driving the cash rate rises of the Reserve Bank of Australia (RBA) was largely rooted in government spending and population growth, rather than Middle East uncertainty.
“It’s the fact that they’ve racked up $660 billion in debt and spending since 2022 across federal and state governments.”
“It’s all public spending. It’s all population growth and migration. The oil price stuff is at the margins.”
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