Commonwealth Bank of Australia said house price growth in Australia is slowing down due to interest rate rises and policy changes in the recent budget, with economists revising their outlook for housing prices lower and a sharper slowdown now expected, according to a Thursday report by the bank.
"We now expect house prices to be flat over the course of this year," said CBA Senior Economist Trent Saunders.
Saunders said three rate hikes and additional pressure from budget changes are adding to pressure already present in the housing market, with addressing supply constraints still key to solving affordability problems in the longer term.
The bank said it expects the Reserve Bank of Australia to cut the cash rate twice next year.
"As more attention shifts towards the possibility of rate cuts, that's when we see market conditions starting to stabilize," Saunders said.
The housing cycle is likely to reach a turning point in early 2027 as expectations of lower rates begin to improve confidence, CBA added.