CBA forecasts home prices to stall as tax reforms outpace Treasury estimates
The Commonwealth Bank has revised its 2026 national dwelling price forecast to flat, citing a sharper-than-expected market reaction to proposed tax reforms and ongoing monetary policy pressures.
Commonwealth Bank economists Trent Saunders and Ashwin Clarke have revised their 2026 national dwelling price forecast to flat, a significant downgrade from previous estimates of 3 per cent growth in the budget and 5 per cent in March. The bank attributes this adjustment to proposed tax changes, specifically the winding back of negative gearing and the capital gains discount for established properties, which they predict will reduce national dwelling prices by 5 per cent.
This projected reduction is more than double the Australian Treasury’s budget forecast of a 2 per cent drag on home prices. The bank’s analysis suggests that while a slowdown in the property market was already underway due to global uncertainty and rising interest rates, the immediate response to the tax changes indicates a sharper near-term impact than previously anticipated.
The revision comes against a backdrop of mixed economic signals. Data from the Australian Bureau of Statistics indicated a slowdown in Australia’s economic growth rate during the March quarter. Despite this deceleration, analysts maintain expectations for a further Reserve Bank interest rate hike in August, reflecting persistent pressures on the housing sector.
Commonwealth Bank’s assessment highlights the divergence between government expectations and institutional analysis regarding the housing market’s resilience. The bank’s senior economists noted that the combination of tighter monetary policy and structural tax changes is likely to weigh heavily on dwelling values in the near term, necessitating a more cautious outlook for 2026.
The updated forecast underscores the sensitivity of the Australian property market to policy shifts. With the Reserve Bank expected to continue its tightening cycle, the convergence of higher borrowing costs and reduced tax incentives for investors is likely to keep downward pressure on prices, aligning with the bank’s new flat growth projection.
