Maybe property downturn isn’t as bad as you think, for now.
Australia's housing market isn't collapsing — but 'not as bad as the screaming suggests' and 'nothing to worry about' are not the same sentence.
Greg Jericho is right about the numbers. A 0.3% fall in total housing value, in a market worth $12.18 trillion, is not a collapse. It is a rounding error. The horror-movie framing coming from vested interest groups and opposition figures, as though a modest correction from pandemic-era highs signals the end of Australian prosperity, really is as absurd as he says. But Jericho's column, for all its numerical honesty, stops at a point that matters: the question is not whether the property market is collapsing today. It is what happens if it gets hit while it is already nervous.
A correction from the unaffordable is not a disaster
The data Jericho marshals is hard to argue with. Even the Commonwealth Bank's projected 10% fall from the March 2026 peak would only take average dwelling prices back to where they were at the end of 2024. In Brisbane, the projected fall would not even return prices to the levels of late last year. Adelaide and Perth have seen median house prices more than double in six years. Sydney's median fell from $1.55 million to $1.49 million in the June quarter. Nobody is calling that a bargain. A correction from a level that was genuinely unaffordable is not a disaster. It is, depending on who you are, either a small relief or a smaller loss than advertised.
And the panic from some quarters is bad faith. The same voices who argued that winding back negative gearing and the capital gains tax discount would have no effect on prices are now screaming that those same changes caused a price fall. You cannot occupy both positions simultaneously and retain credibility. Jericho is correct to name that.
But honest analysis does not stop at debunking. It asks what the data actually tells us about the situation we are in.
What it tells us is this: Australian housing is still, by almost any historical or international measure, grotesquely expensive relative to incomes. Even after a 10% fall, dwellings would sit at 15.4 years of average household disposable income. That is marginally above where we were in mid-2021, and nobody in 2021 was describing housing as affordable. The tax changes have started working as intended, but they have not solved the underlying problem. They have nudged a market that was at 16.9 years of income down toward 15.4 years of income. That is progress. It is not resolution.
The real risk is what the correction combines with
The lesson from most financial crises is not that a single factor brought the system down. It is that a system already under internal stress encountered an external force it might otherwise have absorbed.
The more important issue is structural vulnerability. A market that is falling, or even one where sentiment has turned and buyers are hesitating, has less capacity to absorb external shocks than a market in full boom. And the external environment in September 2026 does not look benign. Bond markets in several major economies remain unsettled. Geopolitical stress points are multiplying. Indonesia, Australia's nearest large neighbour, is carrying significant economic pressure that the optimists have not yet fully priced.
The lesson from most financial crises is not that a single factor brought the system down. It is that a system already under internal stress encountered an external force it might otherwise have absorbed. The property market does not need to be in freefall for that dynamic to apply. It just needs to be at a point where confidence is fragile, leverage is high, and the margin for error is narrower than it was.
Australia's household debt-to-income ratio remains among the highest in the developed world. The three interest rate rises that preceded the June quarter's price fall have not fully worked through mortgage repayment schedules. If something external lands hard in the next twelve months, the property market's current state means the transmission of that shock into the real economy will be faster and deeper than it would have been at a different point in the cycle.
None of that makes Jericho wrong. The correction to date is modest, the panic is manufactured, and the underlying case for the tax changes remains intact. But "not as bad as the screaming suggests" and "nothing to be careful about" are not the same sentence. The first is true. The second is not yet demonstrated.
The sunny day is real. The clouds in the distance are also real. The question is whether they stay in the distance.
Sources
Frequently Asked Questions
Is Australia's housing market actually collapsing in 2026?
No. A 0.3% fall in total housing value across a $12.18 trillion market is not a collapse — it is statistically trivial. Even the Commonwealth Bank's projected 10% fall from the March 2026 peak would only return average prices to where they were at the end of 2024.
Did scrapping negative gearing cause house prices to fall?
The same commentators who claimed winding back negative gearing and the capital gains tax discount would have no effect on prices are now blaming those changes for the price fall — those two positions are mutually exclusive. The tax changes appear to have modestly deflated a market that was at 16.9 times average household disposable income, moving it toward 15.4 times — a real effect, but far from a crash.
What is the real risk to Australian house prices right now?
The risk is not the correction itself but what it might combine with. A market where confidence is fragile, household debt-to-income ratios are among the highest in the developed world, and interest rate rises have not yet fully passed through to repayment schedules has less capacity to absorb an external shock than it did five years ago.
Are Australian house prices affordable after the recent falls?
No. Even after a projected 10% fall, dwellings would sit at roughly 15.4 times average household disposable income — marginally above where they were in mid-2021, a period nobody described as affordable. The correction is progress, not resolution.
Why does a property correction matter even if prices haven't crashed?
Because a falling or hesitating market transmits external shocks faster and deeper into the broader economy. When leverage is high and sentiment has already turned, a secondary event — such as geopolitical stress or bond market instability — can do far more damage than it would at a different point in the cycle.