Falling House Prices Could Benefit Australia, Says Leading Property Analyst
In a rare admission within the property sector, Eliza Owen—head of research at Cotality (formerly CoreLogic)—has openly argued that declining house prices could be good for Australia. Speaking ahead of the federal election, Owen criticised both major parties for backing policies that effectively boost housing demand, saying they risk worsening affordability and inequality.
Owen pointed out that current affordability strategies—such as Labor’s smaller deposit options or the Coalition’s proposals to use superannuation and interest deductions—may help buyers in the short term, but ultimately drive prices higher.
“We can’t keep kicking the can down the road,” she said. “Falling prices, not rising demand, are what will genuinely make housing more affordable.”
Despite fears that lower prices could damage the economy, Owen argues most property owners are financially secure enough to weather a downturn. Data from the December 2024 quarter showed that over 95% of home resales still turned a profit. Even if home values dropped 10%, the vast majority of sellers would remain in the black, with median profits still sitting above $260,000.
A 10% drop would also significantly ease affordability pressures, reducing the typical 20% home deposit by around $16,000 and saving borrowers over $130,000 in repayments over the life of a mortgage.
Downturns Aren’t New—And Often Don’t Hurt as Much as Feared
Australia has seen housing price dips before, such as the 8% drop from 2022 to 2023, and a similar fall from 2017 to 2019. In WA, home prices fell more than 16% over five years after the mining boom, yet the financial system remained stable and mortgage defaults stayed low. First home buyers, meanwhile, benefited from improved affordability.
Even in the unlikely event of a 30% decline, the Reserve Bank estimates only about 10% of borrowers would fall into negative equity—a relatively manageable risk when over 30% of households own their homes outright.
Yes, There Are Risks—But So Is Rising Inequality
Owen acknowledged that falling house prices could negatively affect consumption, state revenue from property taxes, and jobs in the construction and real estate sectors. However, relying on forever-rising prices is also risky and unsustainable, as shown in countries like the US and Ireland during the global financial crisis.
She argues that cheaper housing would free up household spending for essentials like education, health, and innovation, ultimately benefiting the broader economy.
“It wouldn’t be the end of the world,” Owen said. “In fact, it could be the beginning of a more sustainable, fairer future.”
