CBA forecasts home prices to fall by 14%

Australia’s biggest lender, Commonwealth Bank, now expects national dwelling prices to suffer a peak-to-trough fall of about 14% amid souring economic conditions.

The bank, which had previously forecast prices to fall by 9%, revised its forecasts today ahead of what is expected to be the fifth interest rate rise this year.

CBA senior economist Trent Saunders said the price downturn had accelerated to capture mid-sized state capitals Brisbane and Perth.

House prices fall for seventh consecutive month as interest rates dent demandRead more

Saunders expects prices to stabilise late next year.

The revised outlook aligns with CBA’s updated economic forecasts, which warn that the prolonged conflict in the Middle East is helping trigger a “sharper, longer slowdown”.

While most economists had anticipated low double-digit falls in Australian property prices, several now expect peak-to-trough drops of about 15%.

View image in fullscreen Photograph: Lukas Coch/AAP