Commonwealth Bank stock faces record housing downturn forecast

Commonwealth Bank economists have sharply lowered their Australian housing outlook, putting the lender's stock in focus as a broader property correction weighs on household wealth and borrowing conditions. In an analysis published on Tuesday, November 3, Commonwealth Bank senior economist Trent Saunders said national dwelling prices could fall 14% from peak to trough, compared with a 9% decline in the bank's September forecast. The figures were published by CommBank.

Property correction broadens across Australia

CommBank now expects the combined five-capital-city index to decline 15% from its peak. National dwelling values fell 1.2% in October, marking a seventh consecutive monthly decline and leaving prices 6.7% below their March peak, according to the bank's analysis. The five-capital-city index was 8.2% below its March peak.

Sydney remains one of the weakest major markets, while Brisbane and Perth have deteriorated faster in recent months. CommBank raised its projected peak-to-trough decline for both cities to 18%, from about 8% in September. Sydney's forecast moved to 16% from 13%, Melbourne's to 13% from 12%, and Adelaide's to 13% from 8%.

Saunders attributed the deeper revision to a correction that was faster and broader than expected. In his assessment, tight underlying housing supply and demand support remain in place, but excessive optimism had become a more important driver of the previous upswing. Even after the projected falls, Brisbane and Perth would remain above their levels before the recent housing boom.

Higher rates add pressure

The Reserve Bank of Australia raised its cash rate by 25 basis points to 4.85% at its November meeting, the fifth increase of 2026. CommBank had assumed a peak of 4.60% when it prepared its September housing forecasts. Saunders estimates that the higher rate path reduces national dwelling price growth in 2027 by 2 percentage points compared with the lower-rate scenario.

The broader economic outlook has also weakened. CommBank expects annual economic growth to slow to 1% by mid-2027, down from a previous forecast of 1.8%, and does not expect growth to return to its trend rate of about 2% until the second half of 2028. For the bank, weaker property prices and slower household spending point to a more difficult operating environment, although lower rates would eventually support borrowers and credit demand.

Stabilisation depends on policy easing

CommBank forecasts national dwelling prices to fall 8% during 2026 and a further 3% in 2027. Saunders expects the market to stabilise in the second half of 2027 as lower prices, higher rental yields, limited underlying supply and eventual monetary easing improve conditions. The bank does not anticipate a material recovery and continues to highlight uncertainty around the interest-rate outlook.

Commonwealth Bank stock traded at 103.93 euros on Lang & Schwarz at 09:35 CET on Tuesday, November 10, 2026.

The Australian market backdrop remains relevant for Commonwealth Bank stock through the S&P/ASX 200.

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