02/07/2026
Appraisals are key as House Prices continue to Fall & the Market fragments in FY27
02 July 2026 •
FY2027 is set to hit Agents with a fragmented market, falling house values, much softer sales volumes, and a sharp shift to units, with accurate appraisals the key to make or break listings.
According to Domain’s Financial Year 2027 - FY27 Housing Market Forecast, the property market is entering a “clear turning point”, with prices rather than momentum dictating where people buy.
Domain chief residential economist, Dr Nicola Powell, said the days of a single national housing trend were over, with Affordability, Borrowing Capacities, Cash Rate, and a Sentiment driving vastly different outcomes across Cities and Property types.
“For the Year 2027 isn’t a uniform slowdown, it’s a more fragmented market, where some cities are still growing while others soften. “For Agents, that means many fewer transactions overall and a lot more reliance on understanding local conditions and managing more cautious Buyers and Sellers.” According to the report, beyond prices falling, transaction volumes are forecast to slow down significantly in 2027
“In a slower market, pipeline doesn’t just arrive, it must be created. Agents will need to focus on where demand has shifted, particularly toward more affordable segments of the market, and spend more time Educating Vendors on ‘’Pricing and Timing to keep Listings flowing,”
Domain said that affordability pressures and elevated interest rates will keep buyers very cautious, while many vendors are likely to delay Selling rather than accept lower offers.
“Accurate pricing becomes crucial and critical when conditions are shifting.
It’s no longer enough to rely on past Sales, Agents need to reflect what Buyers can afford right now and read real-time signals from the changing market to stay on track.”
Here is what to expect in Financial Year 2027:
House Prices to Fall
Across the combined capitals, the report forecast a stabilising market, with House Prices to experience a small downturn of up to $32,000 to a median value of $1.26 million.
Domain said that strong population growth and persistent housing shortages are expected to keep demand elevated in the smaller capital cities, despite price growth changing and moderating.
Units to Defy Expectation
According to the report, units are expected to outperform houses across most capital cities in FY27 as affordability pressures reshape buyer behaviour and push more demand towards lower-priced properties. “When borrowing power falls, and economic uncertainty rises, behaviour shifts very fast.
Buyers trade location for value, houses for units, and timelines for patience.”
The gap between houses and units is expected to be most pronounced in Sydney, where affordability pressures, reduced borrowing power and stronger first home buyer demand are set to drive comparatively stronger unit market performance. Across the combined capitals, unit prices are tipped to range from a $5,000 decline to a $24,000 rise.
What could change the forecast?
The report identified several risks that could strengthen or weaken the housing market forecast. Domain said that the outlook could improve if interest rates fall sooner than expected, boosting borrowing capacity and encouraging more buyers back into the market. Additionally, stronger first home buyer demand, persistent housing shortages, elevated population growth, and resilient investor activity could also support higher-than-forecast price growth.
On the other hand, the report said that the outlook could weaken if interest rates remain higher for longer, investor demand falls more sharply than expected, or the labour market deteriorates, further eroding buyer confidence and borrowing capacity. Faster housing supply, weaker consumer sentiment and prolonged cost-of-living pressures could also place additional downward pressure on home prices. Right now Buyers are set to be more cautious and Lending institutions banks/brokers are to further tighten borrowing for all types of properties
