Opposition accuses Labor of ‘massive failure’ as house prices tipped to plunge more than 10 per cent

The Opposition has accused Labor of a “massive failure” as property prices tumble, with double-digit declines forecast for Sydney and Melbourne over the coming months.

The Commonwealth Bank expects the current housing downturn to persist well into next year, with prices falling at a faster rate than previously anticipated.

The bank predicts dwelling values in Sydney and Melbourne will decline by 10 per cent or more.

A recovery is not expected until the second half of 2027 and remains dependent on the Reserve Bank cutting interest rates.

Nationals Senate Leader Bridget McKenzie accused the government of either mismanaging the economy or deliberately designing its policies to slow house price growth.

“This is either a massive failure of economic management by the Labor Party or, as Clare suggests in her comments, a deliberate design feature,” she told Sunrise on Wednesday.

“And I think Australians are going to take a very dim view of their largest asset’s value falling through the floor over coming months.”

Housing Minister Clare O’Neil acknowledged house prices were weakening across the country but described the downturn as part of the property market’s regular cycle.

“The housing market in Australia is inherently cyclical. We see periods of really strong house price growth that are followed by a period of housing downturn,” she said.

“That’s happened now about four times in the last decade.”

McKenzie rejected O’Neil’s assessment, calling for Treasury’s full modelling to be released.

“We’re seeing banks calling out that this is going to be the largest price correction in the housing market in 40 years,” she said.

“I remember the last housing price correction 40 years ago, and the whole economy was trashed, and it was, again, another Labor government that oversaw that.”

O’Neil was grilled on Sunrise over whether the government still stood by Treasury modelling that indicated its recent tax changes would cause house prices not to fall, but to grow more slowly than they otherwise would have.

Sunrise host Nat Barr questioned how that modelling could be reconciled with a market in which prices were now falling.

O’Neil said Treasury had examined the effect of one government policy rather than attempting to predict movements across the entire housing market.

“What Treasury models is the effect of the government’s tax changes, not the entire market, but the effect of one piece of public policy that was in the budget,” she said.

“What that Treasury modelling says is that the effect of the government’s tax changes is, over time, growth will be a bit slower than it would otherwise have been.

“They’re not focused so much on the week-to-week, month-to-month movements. They’re looking at the big picture.

“And the big picture is that house prices in Australia will continue to grow, but a bit more slowly because of those big tax changes that we’ve made in the budget.”

O’Neil urged Australians to look beyond short-term movements and consider the longer-term affordability problems facing the housing market.

“We’ve seen house prices in our country grow by 300 per cent since the year 2000,” she said.

“If that happens for another generation in our country, our nation’s going to be unrecognisable to us in terms of equality and aspiration.

“In the year I was born, we lived in a country where ordinary Australians could afford to get into a home of their own and give their kids safety and stability.

“I want that for more Australians, and that’s why our government’s stepping up.”

McKenzie also acknowledged young Australians were struggling to enter the housing market.

“I think everyone’s concerned that young Australians can’t get into their first home, Nat,” she said.

Polling conducted in July found 61 per cent of Australians wanted house prices to fall, with majority support across all political parties.