The UNIMAGINABLE Is About To Happen To Australia’s Housing Market (78% Decline Incoming?)

2026 might be the year of the biggest crash Australia's housing market has ever seen.The same crash that everyone has been expecting for over 20 years.Many people have been dreaming of this.And it's not just a hypothesis anymore.Some analysts are warning that the crash is already here and that what we're seeing right now could be the beginning of something much bigger.If you've opened the newspaper, watched the news or spent five minutes scrolling social media recently, you've probably seen the same headlines.

Look at this, look at this, look at this.I mean, just look at the data.Auction clearance rates are falling to their lowest levels in a long time.Sydney house values are now declining and investors are becoming increasingly worried about the budget changes.The optimistic forecasts that once dominated the housing market are suddenly turning pessimistic.This is a big shift.

The RBA might even raise interest rates one more time before holding them higher for much longer than what we expected.So again, the question is, Is 2026 finally the year the housing market will crash?Are we about to see house prices fall 15 % or 20 % just like they did in Canada or New Zealand?Is housing finally going to correct itself and become somewhat affordable again for first home buyers?Hey guys, Scott here.Now, guys, I generally mean it when I say that we are witnessing one of the biggest shifts in Australian property over the coming year.

Just three changes announced in the budget have completely flipped the property market on its head almost overnight.And the funny part is that in all of my years in property, I have never seen so many buyers agents this nervous, this uncertain, or this busy trying to diversify into other businesses as investors suddenly pull back from the market.There are warning signs everywhere you look right now, and you would generally have to be blind not to notice them.The question isn't if the property market will correct or not.The real question is by how much the property market will decline.To make things worse, Australia's biggest banks like CBA and Westpac are disagreeing on what's going to happen next.

Have you seen this happen before?Not me.Banks are usually pretty aligned directionally.but not this time.That's why this video is so important.It's time we started studying the data and trends and educating ourselves to make smart financial decisions.

The last thing we want in the current cost of living crisis is to be stuck with a bad financial decision that is too big to undo.So if you're a homeowner, a renter, or simply hoping to buy one day, I implore you to watch this video before you make your next financial decision.I'm going to walk you through the real data and research, the bank forecast, the impact of the budget changes, the warning signs, and the arguments from both sides of this debate.Before we get into it, I cover property policy and the economy, your money, every single day so that you stay ahead of the market and aren't blindsided by government decisions, budgets, policies, or RBA announcements.So hit subscribe, hit the bell, and let's get into it.If Australia's housing market really is about to crash, then there has to be a reason.

Property does not just wake up one morning and decide to fall.Something has to break.Right now, there are two forces hitting Australia's housing market at the exact same time, and together, they are creating a level of uncertainty we have not seen for years.The first force is interest rates.Now, interest rates have always been the one thing capable of slowing even the strongest housing markets because they directly impact borrowing power.Buyers who could comfortably qualify for a loan suddenly find themselves priced out of properties they could have afforded only months earlier.

Multiply that across thousands of buyers and demand starts weakening.History shows that high interest rates usually place downward pressure on property prices.Now, there are some exceptions to that, and over the long term, that's not always true, but definitely in the short term, interest rates have a major impact.As an example, we did see the housing market defy the pressure from rising rates only recently, and it shook every economist in Australia, but I will unpack that later.Rates are only half the story.The second force is policy uncertainty, aka the recent 26 -27 budget changes.

For decades, investors understood the rules of the game.Whether it wasgearing, capital gains, tax concessions, or borrowing through self -managed super funds, Australia's property system offered a relatively stable framework for building wealth.We knew the rules.Now, suddenly, those rules appear to be far less certain.They have changed.

We're trying to understand them, and we're unsure what new changes might come along.For example, changes to negative gearing and capital gains tax, and now to SMSF borrowing, have completely flipped the housing market, and investors do not like uncertainty.money does not like uncertainty.

If the government is willing to change the rules today, what happens tomorrow?And if today's property strategy no longer works, what happens tomorrow?What strategy replaces it?

As a result, many investors are simply waiting to figure this whole thing out, watching and trying to work out what is the next best move for them.But one thing remains clear, Aussies know they need to invest for a really great early retirement.The first force is interest rates.The second force is policy uncertainty.So what actually happens when those two forces collide with Australia's property market?If investors are nervous and borrowing capacity is shrinking, surely we'd already be seeing it in the numbers, right?

And we are.Auction clearance rates have fallen sharply across major markets.In Sydney, clearance rates have dropped back towards levels seen during the early stages of the pandemic.Remember how crazy and how uncertain it was then?were in the exact same position.Now, properties are taking longer to sell right now.

Consumer confidence remains very, very weak.Sydney house values have begun declining.Investor activity has massively slowed.Confidence is one of the most important drivers of any property market.

When buyers believe prices will be higher next year, they rush in.But when buyers are uncertain, they think prices will fall, they wait.Right now, more buyers are choosing to wait and we're seeing the impact in all of the numbers.So yes, the property market has absolutely slowed down.The data is not lying.But wait, if the data clearly points to a market crash, why are Australia's biggest banks still so split about the future of property?

What do they know that we do not?Comment below.We'll get to that later.Westpac says the tax reforms will significantly reduce investment in existing homes, while making new -build properties much more attractive.Now, despite weaker sentiment and softer demand, the banks say strong population growth and ongoing supply shortages will prevent a major housing downturn.Like I said at the beginning of the video, no one can agree on the outlook of Australia's property market, but now the score is 1 -1.

Now, we can also look at the REA Group.REA agrees that higher interest rates are hurting affordability and that budget changes are reducing investor demand.Yet despite all of that, REA still expects the market to recover, forecasting capital city prices to rise by 5 .5 % in 2027.Let's stop here and reassess.We have two research institutions saying the housing market will continue to grow, while one bank says the market will crash.Let's tally the scores, shall we?

One for decline, two for boom.So who was right?

The fascinating thing is that almost all of them agree on the short -term policy.The only difference is that some researchers place more weight on higher interest rates, weaker confidence, and slower buying activity.

Others place more weight on Australia's chronic housing shortage, strong population growth, and the fact that interest rates are starting to fall again.So here's the million -dollar question.Does policy uncertainty finally pop Australia's housing bubble, or does chronic undersupply win yet again?The best place to find that answer is an opinion.its history.So let's dig a little bit deeper into the data.

Earlier in this video, I showed you what's happening in the property market right now.But what if we flip the page and dig a little deeper?What if we stop looking only at today's headlines and start looking at historical trends, economic correlations, and the patterns that have played out time and time again?Let's start in the interest rate argument.Back in 2022, the RBA went on one of the most aggressive rate hiking cycles in Australian history.Interest rates went from almost zero to 4 .35 % in less than 12 months.

Now, what do you think happened to property prices during that hiking cycle?One would assume they fell, right?You are 100 % right, they did.Initially, the property market did slow down, but it was short -lived.Only a few months later, property prices started rising again, while interest rates were still rising.That had never happened to that extent before in Australia's recent history.

Historically, interest rates and property prices have had inverse relationship.Rates go up, prices come down, and vice versa.But in 2022, that relationship was completely broken.So the obvious question is, why?This is where the more intricate data I was talking about comes in.Underneath those high interest rates were three much bigger forces that completely overpowered the force of interest rates.

The first was a record high migration.The second was government incentives that made it easier for people to enter the housing market.And the third, and by far the biggest, was Australia's chronic housing shortage.These forces completely outweighed the negative impact from rising interest rates, and eventually property prices started soaring again.Now let's compare that to what's happening today.Have interest rates gone up again this year?

Yes.Has the property market slowed down?A little bit.Absolutely.But this time we've also got something new.Policy uncertainty from the recent budget changes.

So now we arrive at the million -dollar question.Is this just another temporary blip, as we saw in 2022, or is this finally the crash everyone has been waiting for?Let's ask ourselves exactly the same question we asked in 2022.Do we still have a chronic housing shortage?Bloody hell yeah we do.In fact, the government is already falling behind on its target of delivering

1 .2 million homes by 2029.And most analysts believe Australia will remain undersupplied for many years to come.Do we still have strong population growth?Yes, we do.It has come back dramatically, but it's still high.Australia has now officially passed 28 million people, with the population growing by roughly one extra person every minute and 15 seconds.

Now, let's look at the third factor.Do we still have government incentives pushing people into the market?Yes, we do.More than we had back in 2022.We've got the 5 % deposit scheme, 2 % shared equity scheme, and stamp duty concessions at the state level all across the board.So let me ask you this.

That perfect storm that pushed property prices higher over the past few years, is it still there?Yes, it is.It may not be powerful enough to deliver another 10 % or 12 % year over year, but it's absolutely still powerful enough to keep supporting prices.And then there's one final factor, interest rates themselves.The RBA may hold rates higher for longer, but eventually rates are expected to come down as inflation eases and the economy continues to slow.Once inflation is under control, that one force that has been weighing on the property market starts switching sides.

Instead of acting as a headwind, falling interest rates become another tailwind.pushing prices higher.So now look at the scoreboard.On one side, we've got policy uncertainty.On the other side, we've got chronic housing shortages, strong population growth, government incentives, and eventually lower interest rates to come in the future.Now you tell me, which side do you honestly think is going to win?

History tells us property markets don't move on headlines, they move on market fundamentals.History tells us Australia's housing market has repeatedly recovered whenever those underlying fundamentals remained intact.History tells us that between the pessimistic forecast and the long -term fundamentals, the fundamentals have won time and time again.And history tells us one more thing.Australia's housing market is simply too structurally undersupplied to experience the sort of prolonged crash that many people keep predicting.Now, I'd love to hear your interpretation

your opinion of this data.Do you think the crash is finally here?Do you think investors are overreacting?And which forecast do you agree with most?CBA, Westpac?Let me know in the comments below because I generally read them.

If you found this video helpful, make sure to hit like, subscribe, and turn on the bell so you never miss an update on property policy, the Australian economy, and your money.Don't forget to stay informed, pay attention to the data, and I'll see you guys at the next video.Thanks for watching.