These Forecasts Will Catch Most Aussies Off Guard. Major banks Predict the Biggest Shifts in Decades | EP105

I’ve gone through the latest property market forecasts from Australia’s five big financial institutions—CBA, Westpac, NAB, ANZ and AMP—and found a striking pattern. Every one of them has updated their major calls on the Australian housing market in the past 30 days, and all their conclusions point to the same thing. The trend for Australia’s property market over the next 12 to 24 months is now clear.

I know many people don’t trust banks and financial institutions when it comes to property forecasts—history hasn’t been kind to their accuracy. But this time, the picture is hard to ignore. The eight factors that have driven the market higher over the past two years are all in place again. The real question is: which side of the future will you stand on? Will you accept what's happening in the market and start to invest? Or keep resisting what you see as the market’s “unfairness,” and miss what’s widely seen as the final mini bull market before 2030?

Five Major Banks Update Their Forecasts

Over the past month, the biggest story in Australia’s property market wasn’t some record-breaking sale. It was the banks changing their property market forcasts together. That kind of move has been rare in the past decade. And for most of us, banks aren’t in the business of joking around; when they speak, there’s usually a basis for it.

Let’s start with Westpac. They’ve made quite a move. In their latest quarterly housing report released in September, Westpac lifted its forecast for national price growth in 2025 to 6%, and tipped a further 9% rise in 2026. Back in January they were expecting 3% for 2025—so they’ve basically doubled that call. The report lays out the reasoning: rate cuts, tight supply, listings near lows, and an increase in refinancing, among other factors.

The surprise? Westpac believes Melbourne will lead the country in 2025, with a 10% rise for the year. The issue is, if you look at the August data, getting to 10% for the full year looks tough. In the past eight months, not a single month has seen growth above 0.5%.

CBA isn’t sitting back either. They’ve lifted their 2025 growth forecast from 4% to 6%, but trimmed 2026 from 5% to 4%. The upgrade for 2025 comes from expected rate cuts, tight inventory, and an anticipated cut again in November. The downgrade for 2026 is because the current easing cycle looks short and the magnitude of cuts smaller, so the market response may not mirror past cycles. With rates unlikely to fall as much as before, the longer-term boost to prices will be capped. Australia’s median house price to disposable income ratio is at historic highs—in other words, homes are too expensive relative to purchasing power. Even though real wages have risen, affordability hasn’t really improved.

ANZ’s adjustment is especially interesting—if not a full reversal, it’s close. In their February report they expected just 0.9% growth for 2025. By August, they lifted that to 5%. Their 2026 call moved from 3.8% to 5.8%. That’s a jump from pessimistic to optimistic. The changes for Sydney and Melbourne are even more dramatic: Sydney went from a full-year decline of –1.1% to a rise of 4.6%; Melbourne from –0.9% to +4.1%. It’s not hard to see why—RBA cuts in February, then May, then August. With that backdrop, the upgrades make sense. They just sit a bit apart from the other banks’ numbers.

NAB’s outlook is more conservative, but they’ve also revised upwards. The national gain for 2025 moves from 3.3% at the start of the year to 6%, and 2026 from 5.6% to 6%. Same drivers: the easing cycle and the supply-demand setup.

AMP is the most aggressive. At the start of the year they were calling 3% growth in 2025. Now it’s 7%. They didn’t have a 2026 view before; now they’re calling 8–10%. That kind of number would be punchy in any year.

So, to sum up, here’s what the five major institutions are saying. AMP and Westpac are at the top end for expected gains.

This brings something else to mind. There’s a company in Sydney that specialises in selling new homes. They’ve built a website to publish so-called property updates, and they run a YouTube channel. In a recent video, they quoted only AMP and Westpac’s price forecasts and said, “Since the banks are saying this, surely it’s time to change your mind and start buying.” But why leave out the other three banks? Simple—they don’t back up the claim that the market is “rising fast.”

Which raises the real question: how accurate are the banks when it comes to calling the big trend and the size of the move? I’ve gone back over the past ten years of forecasts from these five institutions. I tracked down the sources, the timing, and whether their calls played out. I’ve found the common pitfalls. Not only have they been off the mark; at times, they’ve even called the direction wrong.

Are the Five Banks' Forecasts Really Accurate

If this were in the past, putting together a research like this would have taken days—digging through the internet, cross-checking different sources, then summarising, spotting patterns, and producing a report. But in the AI era, everything’s become easier. Once the research was done, it felt like the puzzle had been solved. Without exception, these financial institutions have made a large number of wrong calls, and at critical moments they failed to grasp the turning points in the market. If you’ve been blindly trusting bank forecasts, it’s time to open your eyes and see what the facts actually look like.

1. Early Bull Market Underestimation (2014–2017)

In the mid-2010s upswing, banks repeatedly underestimated both the strength of price gains and the duration of the bull market. During the 2014–2015 recovery phase, AMP did identify a key point—that the housing recovery would become a major driver of economic growth. But for Sydney they only called a 7–10% rise, far below reality. In 2014 alone, the median price jumped 14.1%.

NAB’s forecast for 2016 was a 1.5% national rise—seen now as far too conservative. They expected Victoria to lead with 1.7% while predicting New South Wales would fall –0.2%. In reality, New South Wales remained strong, showing NAB can misjudge even the market’s direction.

At the start of 2017, NAB forecast a 7.2% rise in home prices, then had to upgrade, because by March Sydney’s annual increase had already hit 19%. Their expectations for detached houses in Sydney and Melbourne were clearly too low; Melbourne ended up with 15.9% growth.

2.Excessive Pessimism in the Panic Phase (2018–2019)

When the market entered a correction in 2018–2019, the clearest forecasting errors were over the depth and the duration of the decline.

At AMP the language shifted from a downturn to a “crash.” Chief Economist Shane Oliver took his Sydney and Melbourne decline estimates from 15% down to 20%, and by January 2019 even warned of a possible 25% drop. Yet in 2018 the national market fell just 4.8%, far short of AMP’s calls.

By mid-2019 the market had bottomed and turned up, catching most “forecasters” off guard. CBA, to its credit, got it right that time—calling a mild recovery in the second half of 2019 and growth into 2020—while the media talked of a 40–50% collapse. Programs like 60 Minutes amplified the mainstream narrative; early 2019 even saw headlines like “Sydney and Melbourne prices could halve.” Looking back, it’s a joke. The market soon moved higher.

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3.The Pandemic Era’s Collective “Blow-Up”

During the pandemic, we saw the most unified and ridiculous set of forecasts in Australian banking history.

In 2020 all four major banks called hefty falls: CBA said a 32% plunge; Westpac and ANZ said 10% nationally; NAB said as much as 15%; AMP said 5% to 20%. What actually happened? Prices dipped 2.3% in the early months, then started rising. Ultra-low rates, government stimulus, and constraints on supply held the market up. The scale and timing of that policy response were severely underestimated, and every forecast failed. They didn’t even get the direction right, let alone the percentages.

After 2021, the banks “learned the lesson” and turned positive—but still underestimated the gains. CBA projected 8% for 2021 and a cumulative 14% by December 2022, and the real market outpaced those figures.

From 2022 to 2025, the banks’ “forecasting” evolved again. Since the calls were off, they adopted the central-bank style: step by step. Wait for the market to move, wait for data to confirm, then adjust the forecast—let the market lead so you don’t get into big trouble. Strictly speaking, that’s no longer forecasting. Westpac expected an 8% fall in 2023, but by July  the market had already rebounded 4.1%. CBA’s calls 7% increase for 2023 and 5% for 2024—sat closer to reality. In 2024, the “forecast” accuracy improved: CBA, ANZ and NAB were broadly reasonable, but all three upgraded multiple times during the year. And for 2025? Seeing decent market performance, they kept lifting the forcasts: CBA from 4% to 6%, Westpac from 3% to 6%, ANZ from 0.9% to 5%, AMP from 3% to 7%—a collective, momentum-chasing revision.

From 2014 to 2025—ten years—we’ve watched the rise and fall of the “house-price forecasting expert” industry. I found the preferences and biases of bank and institutional forecasts:

1.Understating the bull markets. In up cycles, banks’ projected gains are consistently below what actually happens. When doing their research, bank analysts tend to ignore the combined effect of long-term supply shortages, population growth, and policy support.

2.Amplifying crises. In weak markets, banks commonly predict even worse outcomes, sometimes miles off the mark. Why? Their analysis leans on current conditions and overlooks the resilience of the housing system and policy interventions—like higher immigration intakes, rate cuts, and subsidies—all of which can shift the market in a big way.

3.Lagging reactions. Perhaps because previous forecasts were so far off, they’ve become cautious. After getting slapped by reality again and again, who wouldn’t? Now they lean on the status quo; when the market changes, they tweak the forecast. But can you still call that a forecast? What’s missing is any prediction of turning points. So if you’re still watching bank forecasts, you’re mostly getting hindsight. Banks will only “tell” you after the inflection arrives.

Even though bank forecasts aren’t very reliable, this time we can’t help but believe them. Why? Because the market is in fact moving toward a mini bull run, and the eight foundational drivers behind an upswing are all in place right now.

Eight Drivers of a Mini Bull Market

1.Interest rates and affordability. Many people think interest rates are the key force behind house prices. That’s why you saw so many gloomy forecasts during the 2022–2023 rate-hike cycle. But Australia’s housing market showed remarkable resilience. Even with the RBA lifting rates 13 times in a row, prices kept rising. Since the cuts began, housing “affordability” has improved relatively speaking, because repayment pressure has eased. Rates are one of the important drivers of rising prices, but the reverse isn’t always true—there are many moving parts at play.

2.A worsening supply–demand mismatch. In the short term, supply has a big impact on prices. When supply falls short, prices get pushed up. Australia’s population is growing strongly, but new housing is nowhere near enough. The result: prices higher, rents higher, vacancy rates lower. New listings are being absorbed quickly, total listings stay low, and competition between buyers intensifies. Put together, these factors create a clear housing shortage.

3.A rebound in consumer confidence. Confidence is a crucial lever. We only make “big-ticket” decisions—moving home or buying an investment—when we feel good about the economic outlook and our own financial stability. Confidence slumped to historic lows under the weight of economic and socio-political shocks, but has picked up recently. As conditions improve and rising prices create a “wealth effect,” confidence climbs further, drawing owner-occupiers and sellers back into the market.

4.Economic fundamentals providing a floor. Another important factor is the health of the broader economy. Yes, Australia’s GDP growth has been slow, and per-capita GDP went backwards. But employment, manufacturing activity, and commodity prices appear broadly steady for now. In essence, “those who want a job can find one.” Even if the economy softens a little from here, there’s a base to lean on.

5.Population growth as a push. In the 12 months to 30 June 2024, net overseas migration added 446,000 people to Australia’s population. That’s below the record 536,000 when Australia first reopened after the pandemic, but still very strong. We don’t have the 2025 number yet, but estimates sit around 310,000. Population growth has long been a key support for housing. The large inflows of recent years have disturbed the supply–demand balance—one of the main reasons for rising prices and tight rentals.

6.Easier credit. When it’s easier to get a bank loan—lower rates, looser lending standards—the housing market tends to get a lift. More people can borrow to buy, and demand rises.

7.Investor sentiment. How investors feel about the market—and what they expect—can move demand and prices in a big way. Investors typically account for around 30% of all transactions. When sentiment runs hot, it can push popular suburbs higher.

8.Government incentives. Policy support can shape real estate directly and indirectly. The most direct is demand-side stimulus: first-home grants, stamp-duty concessions for first buyers, 5% deposit schemes—all of these raise purchasing capacity and lift demand. 

We’ve said before: in rising markets, banks’ forecasts are usually conservative. With these eight fundamentals in place, the upside potential should exceed what the banks are calling. That’s good news if you already own a property because it is gaining value. But if you haven’t bought yet, or you’re preparing to buy, getting in will only get harder as prices climb.

So here’s the question: with prices this high, can you still use property investing to reach financial freedom?

Should you buy now?

Over the past year, prices across the capital cities rose an average of 8.5%. Sydney’s median house price is closing in on $1.7 million, and Melbourne has crossed $1 million. For ordinary wage earners, that looks intimidating. But we need a different lens. Financial freedom doesn’t happen overnight; it’s a process. Even with prices high today, if you can enter the market, the future gains can still be substantial.

Say you buy an entry-level house in Brisbane or Perth for $900,000. Using the long-term market average of around 7% a year, in ten years the price doubles to $1.8 million. If you borrowed 80%—that’s $720,000—and ignore principal repayments for now, your equity rises from $180,000 to $1.08 million over that period. You might not even need to wait ten years. By around year three, you could be in a position to release some equity and roll it into your next property—accelerating the compounding.

Even if you can afford it, don’t jump straight into an expensive property. Start with what you can comfortably hold, then upgrade as your assets appreciate. There are still openings in the market. For example, there are areas one to two hours from the major cities where prices are lower but growth potential is decent. In parts of Brisbane and Perth, you can still find quality properties in the $800,000 to $1 million range.

Most importantly, don’t wait for the “perfect moment.” Property is a long-term game. Time in the market matters more than timing the market.

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