iscover 
While price growth has continued to outperform expectations, Trent Saunders, senior economist at Commonwealth Bank of Australia (CBA), said the strength seen in recent years is unlikely to persist at the same pace.
“Over the past few years, the Australian housing market has remained much stronger than most people expected,” Saunders said.
National dwelling prices rose close to 10 per cent over the past year and are now about 55 per cent higher than pre-pandemic levels, with detached housing outperforming the broader market.
A two-speed market
However, Saunders cautioned that the headline figures mask significant divergence across the country.
Market conditions remain uneven, with stronger growth concentrated in smaller capital cities.
“What we’ve really seen is a two-speed housing market,” Saunders said.
Perth, Brisbane, and Adelaide have led price growth, underpinned by strong population increases relative to available housing supply. Since the start of the pandemic, Perth prices have risen more than 40 per cent, while Brisbane has recorded gains of around 30 per cent.
“In those states, population growth has been much stronger relative to dwelling supply,” he said.
By contrast, Sydney and Melbourne have lagged, with supply dynamics easing upward pressure on prices.
“In Sydney and Melbourne, construction has actually outpaced population growth,” Saunders said. “Those are the cities where prices have come in below the national average.”
A recent episode of Broker Daily Uncut has discussed how market pressures are increasingly producing a more divergent housing market in Australia.
Affordability reshaping demand
Affordability constraints are increasingly influencing buyer behaviour, particularly in more expensive markets.
“There’s been more activity at the more affordable end, where affordability pressures are more binding,” Saunders said.
This has led to relatively stronger demand in lower-priced segments, while higher-end property markets have seen softer conditions.
Supply remains the key issue
Despite policy measures aimed at boosting demand, Saunders said Australia’s housing affordability challenges ultimately stem from insufficient supply.
“We’re not building enough housing at the same time that population growth has been strong,” he said.
He noted that while initiatives such as low-deposit schemes can help some buyers enter the market, meaningful improvements in affordability will require structural reform.
“There’s widespread recognition that supply reform is where the bigger gains will come from,” Saunders said.
Current construction levels remain well below the targets set under the National Housing Accord, which aims to deliver 1.2 million new homes by mid-2029.
There have been attempts by states to unlock additional supply, most recently in the pre-sale guarantee schemes rolled out in Western Australia and NSW.
Growth to moderate, not reverse
Looking ahead, the bank expects national dwelling prices to rise by around 5 per cent this year, before slowing further to 3 per cent in 2027.
“The biggest driver is higher interest rates,” Saunders said.
A moderation in population growth and potential investor policy changes are also expected to contribute to softer conditions.
Even so, Saunders said he did not expect a broad-based decline in prices.
“For markets like Perth, Brisbane and Adelaide, fundamentals remain strong,” he said. “We expect growth to slow, not reverse.”
[Related: Broker Innovation Summit 2026 launches]
Want to see more stories from trusted news sources?Make Broker Daily a preferred news source on Google.