HSBC forecasts a 13% house price fall by 2027: what it means if you're waiting to buy

HSBC's chief economist for Australia, Paul Bloxham, has told clients national home values could fall by 13% between April 2026 and mid-2027. If it plays out that way, the bank says it would be the largest housing price correction in modern history, larger than the roughly 8% capital city fall recorded between 2017 and 2019, which had stood as the biggest drop in three decades. For anyone saving a deposit and watching the market from the sidelines, a call this size is worth understanding properly rather than reacting to the headline number alone.

Why HSBC is calling this the biggest correction in decades

The forecast measures the fall from the market's peak in April 2026, the month before the federal government announced significant changes to property investment tax settings in the May Budget, through to around mid-2027. Bloxham's report points to two forces compounding each other: the tax changes reducing investor demand at the same time as higher interest rates squeeze borrowing capacity for everyone else. HSBC is not alone in revising its outlook lower this year. ANZ, Westpac IQ and CommBank have all cut their own 2026 growth forecasts in recent weeks, though HSBC's 13% figure is the most bearish call from a major bank so far.

What is actually driving the size of this forecast

• Investor tax changes: the May Budget reforms altered the settings that had supported investor purchasing power, and HSBC expects that to keep weighing on demand through 2027.
• Higher borrowing costs: a run of rate rises earlier in the year, combined with the possibility of another increase at the Reserve Bank's late September meeting, has already reduced how much buyers can borrow against the same income.
• A market that had already turned: national values had fallen for five straight months by August, with the downturn spreading to the large majority of capital city suburbs, so the starting point for this forecast is a market already softening rather than one at its peak.

What this means for first home buyers

A large forecast fall is not automatically good news or bad news for someone trying to buy their first home. It depends heavily on your own borrowing capacity, your timeline, and whether the segment of the market you are looking at behaves the same way as the national average. Entry level and lower priced properties have historically held up better in downturns than the higher end of the market that HSBC and other banks say is leading this one.

• Falling prices can improve affordability, but if rates rise again your borrowing power could shrink at the same time, which may offset some or all of the benefit.
• A forecast is not a guarantee. Bank economists have revised these calls up and down through the year as new data has come in, so treat this as one input rather than a certainty to plan around.
• If you are weighing up buying now versus waiting, it is worth modelling both paths against your own numbers rather than relying on a single national average.

Run the numbers

Rather than guessing how a further price fall, or another rate move, would change your position, it is worth testing both against your own situation:

• Buy Now vs Wait Calculator - see how buying today compares with waiting one, two, three or five years under different price growth assumptions
• Borrowing Power Calculator - check what a lender may be willing to approve if rates move again before you buy
• Am I Ready to Buy? - work through where your deposit, income and expenses currently sit against a realistic purchase timeline