In September 2008, a Western Sydney University economist sat down with a Macquarie interest rate strategist and made a bet. He said Australian house prices were going to crash 40 percent off the back of the Global Financial Crisis. The loser would walk from Canberra to the top of Mount Kosciuszko wearing a t-shirt that said so.
It took until 2009. Steve Keen lost the bet. He laced his boots, packed the shirt and walked the 224 kilometres. The shirt read, in his own words, "I was hopelessly wrong on house prices, ask me how."
That's the version of the story most people remember. The bit they forget is what the market did over the same period. Between 2007 and 2010, the median capital city house price rose from $387,000 to $460,500. While Keen was walking, prices were going up.
It would be easy to write this off as one bloke and one bet. Except it's happened 3 more times since, with a similar playbook.
A 30-year scoreboard
Before we look at each "crash" forecast, let's analyse what the market has actually done. The chart below uses sales-weighted annual medians across Australia's combined capital cities (Sydney, Melbourne, Brisbane, Perth, Adelaide, Hobart, Canberra and Darwin) in the Pricefinder database, 1995 to 2025. Every point on the line is a year of actual sales. The red dots are the moments the bears told Australians to sell.
The line doesn't crash. It softens once or twice and then keeps climbing. Three respected forecasts told Australians the line was about to fall off the edge. It didn't.
Three times Australia was told to sell
Same pattern every time. One of the most respected names in Australian finance (an economist, then a big four bank, then a national news segment) puts a scary number on the table. Every other media outlet then piles in to chase the click. Then the market does the opposite.
There's a reason the cycle repeats. Bad news sells. A "property crash" headline gets opened, shared, argued about at the family dinner table. That's why you see one every other year, and it's why most of them never land. Here's how the three big ones actually played out.
Did Australian house prices crash during the 2008 GFC?
Steve Keen is not a lightweight. He was one of the few economists to publicly forecast the GFC itself, which gave his crash call genuine credibility. When he said Australian prices would fall 40 percent in five years, mortgage holders listened. Some sold.
What actually happened: national values fell 6.4 percent across 2008 (the worst calendar year of the crisis, per CoreLogic), then climbed back. Quarter by quarter through 2009, the national median picked up 3.5 percent, 3.9 percent and 4.6 percent. Across 2008 to 2010 the Pricefinder data shows the combined capital city median moving from $401,000 to $460,500, a 19 percent rise. Sydney went from $475,000 to $565,000 in the same window. Brisbane went from $401,000 to $437,500.
Why? Because the RBA dropped the cash rate from 7.25 percent to 3.00 percent in seven months, the government threw a tripled First Home Owner Grant at the demand side, and Australia (unlike the US) didn't have the toxic loan book that triggered forced selling in the first place. The crash needed a seller's panic that never came.
Did COVID crash Australian house prices in 2020?
I remember this one well. March 2020, businesses were cutting back, borders were closing, retail shut down, fortunes wiped on the share market in a fortnight. It was all doom and gloom. In fact, the big four banks released worst-case forecasts and the worst of those was Commonwealth Bank's: a 32 percent property price collapse over three years. ANZ wasn't far behind.
National home values dipped 1.7 percent in the first few months, then they rose 33.1 percent across the next two years. Sydney and Melbourne climbed roughly 20 percent in 2021 alone. The Pricefinder data shows the combined capital city median jumping from $635,000 in 2020 to $840,000 by 2022. That is a 32 percent rise. The forecast number was right. The sign was wrong.
The mechanism wasn't a mystery. Rates went to emergency lows. Government stimulus poured in. The population stopped commuting and started looking for more space. The bears were modelling the loss of demand. The market priced in cheap money and a craving for somewhere to ride out a pandemic.
Did the 2022 to 2024 rate hikes crash the property market?
The RBA delivered 13 consecutive rate rises between May 2022 and November 2023, taking the cash rate from 0.35 percent to 4.35 percent. It was the fastest tightening cycle in a generation. ANZ called an 18 percent fall in capital city prices. News.com.au and 60 Minutes ran weekly "mortgage cliff" segments. Everyone I spoke to expected blood on the streets. I'll be honest, in late 2022 I thought Sydney would cop a harder dip than it did. (If you want the full picture on what the RBA is doing now and why, I covered it in Interest Rates Rise Again, But Why?)
The market dipped about 7 percent through 2022, then went the other way. By the end of 2023 the national median had not only recovered but kicked higher. Through 2024 and 2025, prices accelerated. National annual growth in 2025 was 8.6 percent, the strongest calendar year since 2021. Brisbane crossed a $1 million median house price for the first time. Perth led the country.
The mortgage cliff itself? By April 2024, fewer than 1 percent of Australian home loans were 90 days in arrears. Lower than pre-pandemic. The borrowers who rolled off fixed rates had savings buffers, kept their jobs and paid their bills. The "cliff" wasn't a cliff. It was the edge to another climb.
"40% fall in five years."
"Home values could fall 32%."
"Capital city prices to fall 18%."
How much have house prices grown in each capital city?
The national line hides how big the lift has been at the city level. Here is the same dataset cut by capital city, from 1995 to 2025.
Different markets cycle at different times, but the multi-decade story is remarkably consistent. The flat city is Melbourne in the second half of the 2010s, and even Melbourne is up 718 percent from 1995. The slow city is Perth, and Perth is up 593 percent. None of those are crashing markets. They're cyclical.
Why every Australian property crash forecast has been wrong
The bears aren't lightweights. Steve Keen, the bank chief economists, the credit analysts who warned about the mortgage cliff. They use proper models. They publish in peer-reviewed journals. They have skin in the game. So why do they keep missing?
The "Australian housing bubble" has been called by someone every other year for the last decade. It hasn't burst, because the things that actually cause a bubble to burst (oversupply, distressed selling, banks pulling credit at scale) haven't shown up. Three reasons keep doing the heavy lifting.
The first is supply. The Australian property market is short of homes. Has been for a decade. Last week's Federal Budget projection of 1.2 million new homes by mid-2029 is already roughly 30 percent behind delivery. Net overseas migration peaked at 547,200 in 2023. We built 172,000 dwellings the same year. The math behind that gap doesn't crash a market. It puts a floor under it. We wrote about this in detail in The Housing Gap.
The second is forced selling. Real property crashes need distressed sellers. Lots of them. The US in 2008 had subprime borrowers with negative equity and no jobs handing keys back to banks. We didn't have that then, and we don't have it now. Less than 1 percent of Australian mortgages are 90 days in arrears. Banks aren't repossessing at scale. Without forced supply, there is no flood of cheap stock for buyers to step into. Prices stay sticky.
The third is the people themselves. Two-thirds of Australian households own (or are buying) the home they live in. Another one in five rents from a private landlord who'd rather lose a few grand a month than crystallise a loss. Owners hold. Investors hold. The selling that has to happen to make a crash forecast come true just doesn't materialise.
Bear models forecast the demand side. They miss the supply side, the lender side and the patience of Australian owners. Three predictions in a row should be enough evidence to retire the playbook.
Dr Andrew Wilson at MyHousingMarket said it perfectly in his May 2026 update. "Housing demand continues to outpace low and diminishing housing supply." That's the line every model needs to start with.
What the 2026 Budget changes mean for property prices
Which brings me to where we are right now, in June 2026, with a fresh Budget on the books and a new round of pundits queuing up to predict a fall.
I wrote about the Budget tax reforms in detail two weeks ago (read it in full: Federal Budget 2026, Explained for Property Investors). Short version: from 1 July 2027, negative gearing is restricted for established residential property bought after Budget night, the 50 percent CGT discount is replaced with an inflation model and a 30 percent minimum tax, and existing investors are grandfathered. The one carve-out that matters most for what comes next is this: new builds are exempt from both changes.
Read that carefully. From 1 July 2027 onwards, if you want negative gearing and the better CGT outcome, you have to buy a brand new home or build one. The reform doesn't take demand out of the market. It funnels every retail investor who wants the old tax breaks straight at the new-build queue.
And that queue isn't moving fast.
Four data points on what the construction industry is up against right now:
I saw this play out last week. I was in Melbourne inspecting new build houses that were going up for sale. Three of the five we walked through sold that day, before they even hit the market. That's the demand side already at work, and the Budget changes haven't even kicked in yet.
Think about who's already chasing every new build approval today: the first home buyer with a stamp duty concession, the investor in a SMSF deploying retirement capital, the family relocating to a growth corridor. From 1 July 2027 every retail investor who wants the old tax benefits joins that queue too. More buyers competing for the same constrained pipeline of new dwellings, with input costs rising and trades thin on the ground.
That isn't a recipe for falling prices. New build values get bid up first, then established stock follows behind because every dwelling competes with every other dwelling eventually. The Budget hasn't dampened the property market. It has concentrated it.
What investors should actually do
If the last 30 years tells you anything about Australian property, it's that the people who get into the market (when they can comfortably afford to do so) end up ahead, and the panic sellers end up regretful. The maths is the same now.
Three of the last three crash forecasts were demand-side calls. The market kept rising because the supply side never showed up. Watch the building approvals, the vacancy rate and the completion times. Watch the cash rate second.
The Budget rewards new construction with both negative gearing and the better CGT outcome. That tax preference now lines up with the same advice we have always given investors who don't have the capacity to develop or renovate themselves. Buy new. Lock in the deductions while they exist on that asset class.
Perth and Brisbane are running. Adelaide is right behind them. Sydney and Melbourne have been the laggards but Melbourne's discount to Sydney is now at its widest in two decades. The next leg up isn't going to fire in every postcode at the same moment. Pick the city where the math is most one-sided right now.
The people who bought in 2008 because Steve Keen was wrong, in 2020 because CBA's worst case never materialised, and in 2023 because ANZ's 18 percent fall didn't happen, are the ones sitting on capital gains today. Skip the BBQ advice. Hold. The data has been saying the same thing for 30 years.
The bottom line on a 2026 property crash
I've been doing this long enough to know the next "crash is coming" headline is no more than a few weeks away. It always is. An economist will model it, a news channel will run with it, and a mate of yours will message you on a Tuesday night asking if they should sell their place.
Show them the chart. Three respected voices made the same call across 15 years. Each time the structural reasons stayed in place: undersupply, no forced selling, owner inertia, migration. The 2026 Budget hasn't taken any of those reasons away. It has added another one by concentrating tax-favoured investor demand on a construction sector that can't build fast enough as it is.
That's not a crash setup. That's the next leg of a 30-year story.
If you want to know what the property market is actually doing right now (not what the headline of the week says it's doing), the discover area of hotlister.com.au is where I publish the running data, including the suburb scanners, market watch and the next Market Pulse.