< img src ="https://www.realestate.com.au/news/wp-content/uploads/2026/03/capi_14af289f868ee0e0534b066850ae4caa_e50a405bba001d69d426ca1c5fe02e1e.jpeg"alt=""> A powerful mix of a record-breaking rise in new housing supply and continuous rate of interest walkings is set to set off an unprecedented property price recession, with new modelling pinpointing the September 2027 quarter as the moment the market will feel the pinch.
Research study from HomeLoanRates.com.au, performed by Primara Research, exposes a staggering 54,000 new homes were added to the market in the December 2025 quarter.
This represents the biggest single-quarter boost in residential house stock because 2016, a substantial 25 per cent above the typical quarterly supply.
While such a massive influx of new housing might recommend an immediate market response, Primara’s analysis highlights a vital seven-quarter lag before the full weight of the supply surge is felt in home prices.
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This hold-up suggests that while the December 2025 supply figures are currently in the rearview mirror, their profound result on prices is yet to materialise.
Had supply development kept its average quarterly rate, the September 2027 quarter may have seen a national price increase of 1.15 percent.
Victoria is predicted to experience a 1.44 per cent fall in the September 2027 quarter, with numerous unfavorable quarters throughout 2026, culminating in a cumulative 21-month decline of 1.5 per cent, bringing the typical to$919,400. Tasmania and the ACT are also expected to deal with more modest declines of 0.3 per cent and 0.7 percent respectively over the seven-quarter duration.
Alternatively, markets less exposed to this supply rise are projected to continue their robust development.
Queensland is set for a 13.1 per cent increase, pushing its mean to $1.206 million.
South Australia is forecast to climb up 13.8 percent to $1.067 million, while Western Australia leads the charge with an anticipated 16.3 per cent increase to $1.179 million.
“The national headline will state costs are falling, however that obscures what is actually a tale of two real estate markets,” Mr Drennan said.
“NSW and Victoria are taking in a double hit, minimized loaning capacity and a supply surge that their markets are extremely sensitive to.
“On the other hand, the very same rate environment is actively rerouting capital into Queensland, WA and SA.”
SQM’s remarkable reversal for eastern capitals
Previously this month, SQM Research also devalued its 2026 market forecast, which reveals Australia’s two most popular property markets, Sydney and Melbourne, are now formally reversing.
The dramatic shift marks a significant reversal from the company’s earlier, more positive predictions, painting a substantially bleaker picture for the eastern capitals due to a potent mix of consistent energy shocks, re-accelerating inflation, and the looming threat of more RBA rates of interest hikes.
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Anticipated home cost drops by 2027 could spell great news for first-home purchasers.
The Commonwealth Bank, in its most current financial upgrade, suggested the Reserve Bank’s February and March rate hikes might subtract 1 percentage point from 2026 cost growth forecasts and 2 portion points from 2027.
PropTrack economic experts are likewise anticipating a slowdown in residential or commercial property cost growth due to rising interest rates.
Likewise, ANZ senior financial expert Madeline Dunk highlighted that while overall listings are considerably below typical levels in smaller sized capital cities like Brisbane, Perth, Darwin, and Adelaide, “brand-new listings are a bit higher than normal in Melbourne and Sydney. We anticipate Melbourne and Sydney to underperform, especially in the first half of the year, with costs growing less than 3 per cent in 2026.”