Australia’s property market is under mounting pressure, with declining buyer enquiries, weaker sales activity, and growing uncertainty around interest rates.

In this episode of The CEO Breakdown, John Saade, CEO of Latitude Accountants, examines the latest housing market developments, including Stockland’s reported 71% decline in buyer enquiries, Morgan Stanley’s revised property price forecasts and the potential consequences of another Reserve Bank of Australia (RBA) interest rate rise.

But John’s biggest concern extends beyond falling house prices. With construction businesses under pressure, major corporations announcing job cuts and economic growth expected to soften, could Australia’s property downturn be signalling broader financial challenges?

Here’s what the latest developments could mean for property investors, homeowners and Australian small business owners.

Australian Property Market 2026: Why Are Buyer Enquiries Falling?

One of the most concerning developments highlighted in John’s breakdown is the significant decline in prospective property buyers.

According to figures discussed in the episode, property developer Stockland reported:

• A 71% year-on-year decline in prospective buyer enquiries.
• A 29% reduction in sales across its master-planned communities.
• Particularly challenging conditions in New South Wales.

These figures suggest that prospective buyers are becoming increasingly cautious about entering the property market.

When property prices are declining, and borrowing costs remain elevated, buyers may choose to delay purchasing rather than risk committing to an asset that could lose further value.

For developers, however, fewer enquiries today can translate into weaker sales, delayed construction and reduced future housing supply.

Could Australia’s Housing Shortage Get Worse?

While declining property prices may appear positive for prospective buyers, reduced development activity creates another challenge.

If developers postpone projects because demand is insufficient to justify construction costs, fewer new homes may enter the market.

This creates a difficult situation: Australia needs additional housing supply to improve affordability, yet the financial conditions required to deliver that supply are becoming increasingly challenging.

Morgan Stanley Forecasts a Potential 10–15% Property Correction

Another major discussion point involves Morgan Stanley’s revised Australian housing market outlook.

As reported in the episode, the investment bank forecast a potential national property price decline of 10–15% by the end of 2027.

John also highlights housing data showing simultaneous quarterly declines across Australia’s capital cities, with Perth, Brisbane and Sydney experiencing particularly significant pressure.

However, forecasts are not guaranteed outcomes. Property performance can vary considerably depending on location, dwelling type, local demand and broader economic conditions.

Has the Australian Property Market Reached the Bottom?

John believes there are still insufficient indicators to confidently suggest the housing market has reached its lowest point.

He identifies several developments worth monitoring:

• Interest rate cuts becoming more likely.
• Property sales increasing relative to listings.
• Improving auction clearance rates.
• Government policy becoming more supportive of housing activity.
• Purchasing becoming more financially attractive compared with renting.

Until these conditions improve, uncertainty may continue influencing buyer confidence.

How Higher Interest Rates Could Affect Property Buyers

Interest rates remain another significant factor influencing Australia’s property market.

During the episode, John discusses comments from RBA Deputy Governor Andrew Hauser regarding a worsening inflation outlook and the possibility of further monetary tightening.

Higher interest rates can affect property demand in several ways.

Reduced Borrowing Capacity

When interest rates increase, lenders assess borrowers against higher repayment requirements.

This can reduce the amount prospective buyers qualify to borrow, particularly when lending assessment buffers are applied.

Increased Mortgage Repayments

Existing borrowers on variable-rate mortgages may experience higher repayments, reducing disposable income and increasing household financial pressure.

Greater Pressure on Property Investors

Investors with substantial borrowing may face tighter cash flow as interest expenses increase.

This makes reviewing rental income, deductible expenses, financing arrangements and overall investment performance increasingly important.

Falling Property Demand Is Putting Construction Businesses Under Pressure

The consequences of weaker housing activity extend well beyond homeowners and investors.

John highlights declining development activity and growing financial pressure across Australia’s construction sector.

When fewer properties are sold, the effects can spread throughout the industry, affecting:

• Builders and construction companies.
• Electricians, plumbers and subcontractors.
• Property developers and suppliers.
• Real estate agencies.
• Furniture retailers and other property-dependent businesses.

For construction businesses operating with tight margins, delayed projects and slower customer payments can create significant cash-flow challenges.

Maintaining accurate financial records, monitoring project profitability and forecasting upcoming expenses become particularly important during uncertain market conditions.

Could Australia’s Property Downturn Signal a 2027 Recession?

John also examines the wider economic implications of weakening property activity.

In the episode, he discusses NAB’s announced reduction of approximately 2,500 roles, alongside warnings of softer economic growth and potentially higher unemployment.

His concern is that declining property activity, corporate restructuring and reduced consumer confidence could combine to create broader economic difficulties.

Although a recession is not inevitable, these developments highlight why businesses should prepare for changing economic conditions rather than relying solely on continued growth.

What Should Australian Small Business Owners Do Now?

John’s central message to business owners is that waiting for economic conditions to improve is not a financial strategy.

Instead, businesses should focus on understanding their numbers and strengthening their financial position.

Practical steps include:

1. Monitor cash flow: Understand exactly how much money enters and leaves your business.
2. Review your Xero records: Keep financial information accurate and up to date.
3. Plan for tax and superannuation: Know your upcoming obligations and payment deadlines.
4. Review business structures: Ensure your current structure remains appropriate under applicable tax rules.
5. Prepare financial forecasts: Consider how reduced revenue or higher borrowing costs could affect operations.
6. Seek proactive accounting advice: Identify potential financial issues before they become more difficult to manage.

For businesses connected to Australia’s property and construction sectors, these measures can be particularly valuable.

Frequently Asked Questions About Australia’s Property Market Downturn

Why are property buyer enquiries falling in Australia?

Higher borrowing costs, declining property values and uncertainty about future interest rates can encourage prospective buyers to postpone purchasing decisions.

Will Australian house prices fall by 15%?

Morgan Stanley’s forecast discussed in the episode suggests a potential 10–15% national correction by the end of 2027. However, this remains a forecast rather than a guaranteed outcome.

How does falling property demand affect small businesses?

Reduced property transactions can affect builders, tradies, suppliers, real estate agencies and other businesses that depend on housing activity, potentially reducing revenue and increasing cash-flow pressure.

How can an accountant help during an economic downturn?

An accountant can assist with budgeting, tax planning, cash-flow forecasting, business structure reviews and identifying financial risks before they escalate.

Protect Your Business with Latitude Accountants

Australia’s changing economic conditions make proactive financial management more important than ever.

At Latitude Accountants, we help Australian business owners understand their numbers, manage tax obligations and make informed financial decisions with confidence.

Whether you’re concerned about cash flow, business profitability, property-related taxation or preparing for economic uncertainty, our experienced team is here to help.

Get a FREE consultation for ABN holders.

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📧 info@latitudeaccountants.com.au

Disclaimer

This article provides general information only and does not constitute financial, tax, accounting, legal, property or business advice. Market forecasts and economic commentary reflect the information discussed at the time of publication and are subject to change. Seek advice from a qualified professional regarding your individual circumstances before making financial or investment decisions.