How far have Australian property prices ever fallen? A history for lenders

The largest national fall in Australian home values in recent decades was about 8.4%, in 2017–19. The GFC fall was about 7.6%, the 2022–23 fall about 7.5% and the early 1990s fall about 6.2%. Each was followed by a recovery to new highs. Cities and individual properties have fallen further, which is why lenders build in a much larger buffer.

HomeSec Business Finance, an Australian private lender founded in 2004, has lent through the GFC, the 2017–19 downturn, COVID and the 2022–23 rate-rise fall. This insight sets out the record as a lender reads it: not to predict the next move, but to judge how much equity a loan needs behind it. All figures are approximate. Different index series and later revisions give slightly different numbers, so treat them as a guide to scale rather than exact values.

How far have national home values fallen in past downturns?

The table below draws on CoreLogic figures, now published by Cotality, which was renamed in 2025.

Sources: ABC News, Property Update and Cotality.

Two things stand out. The falls are shallow by international standards. And every completed downturn in this period has ended with values reaching new highs, sometimes within a year.

What was the biggest housing crash in Australia?

In national terms, Australia has not had a crash of the kind seen in the United States after 2007. The deepest national fall in recent decades was the 2017–19 downturn, when values drifted lower for about two years, from mid-2017 to mid-2019. CoreLogic’s national measure put the fall at about 8.4%; the ABC reported a 10.2% fall from the 2017 peak. For a lender, it is sensible to use the deeper figure.

The early 1990s are worth noting for a different reason. Interest rates were then around 18%, yet national values fell by only about 6.2%, over roughly 22 months. They did take about four years to regain their peak, which is a reminder that recovery can be slow even when the fall is modest.

How quickly have values recovered?

Recovery times have varied widely.

• Early 1990s: about four years to regain the previous peak, after a 22-month fall.
• 2022–23: national values peaked in April 2022, fell about 7.5% to a floor in January 2023, then climbed about 8.1% to a new record high on 22 November 2023, roughly ten months later.

Over the long run, the trend has been strongly upward. In the 30 years from December 1991 to December 2021, house values rose about 5.6% a year and units about 4.7% a year, and the national median dwelling value rose from about $114,000 to about $710,000.

For a short term lender, though, the long run matters less than the next 12 months. A loan of 1 to 12 months cannot wait four years for a recovery. What protects it is having enough equity to absorb a fall if the property has to be sold during one.

Do cities fall further than the national average?

Yes, often by a good margin. The national index blends many markets moving in different directions.

In 2022, when national values fell about 8% through December, Sydney fell 12.7% from its January 2022 peak and Melbourne 8.3%. When national values reached a new record in November 2023, Hobart was still 11.8% below its peak.

The pattern is the same in 2026. As at August 2026, Cotality reports Sydney 7.1% below its February peak and Melbourne 6.8% below its peak, while Darwin values were up 14.6% over the year.

Individual properties can move further again. An unusual property, or one with a narrow pool of buyers, can sell well below a valuation in a soft market. That is why HomeSec avoids unusual properties and anything that would take a long time to sell, and knows property markets right across Australia.

What is happening in the property market in 2026?

After a strong 2025, when national values rose 8.6%, values are now softening. As at September 2026:

Cotality notes that a growing number of economists expect the RBA could lift the cash rate again, which would further squeeze borrowing capacity.

The underlying backdrop is tight. Australia’s population reached 27.9 million in March 2026, growing 1.4% a year. Against a Housing Accord target of 1.2 million homes by mid-2029, about 308,000 had been completed by the March quarter 2026, and the target is now expected to be met in the December quarter 2030. Construction costs are about 51% above pre-COVID levels.

Our Australian property market page tracks these figures in more detail.

Why does this history matter to a lender?

Because a secured loan is only as strong as the equity behind it. If a borrower defaults and the property is sold, any fall in value, the sale costs and the interest that accrues during the sale all come out of the equity buffer before the lender’s capital is touched.

A 20% buffer is roughly double the deepest national fall on record. It is also larger than Sydney’s 12.7% fall in 2022, with room left over for sale costs and some months of interest. On commercial property, where values can move more sharply, HomeSec lends at lower LVRs. Our explainer on LVR for mortgage investors works through the arithmetic.

What doesn’t the history tell us?

History is a guide, not a forecast, and an honest lender keeps its limits in view.

The past range is not a ceiling. The deepest fall of the last 35 years is not the deepest fall possible. A buffer should be sized for something worse than the record, not equal to it.

Averages smooth the edges. A national index blends hundreds of suburbs. The property securing any one loan sits in one suburb, on one street, and can move differently.

Falling markets are slower markets. In a downturn, buyers take longer and campaigns run longer. For a lender selling a property after a default, time means more interest accruing and a larger bite out of the buffer.

Recovery time is not the lender’s friend. An owner-occupier can wait out a four-year recovery. A lender recovering a short term loan usually cannot, so it must be protected at today’s prices, not tomorrow’s.

How does a lender use this history in practice?

In practice, the record feeds into a simple stress test on each loan. Take an independent, current valuation. Apply a fall at least as large as the worst the relevant market has seen, not just the national figure. Deduct realistic sale costs. Add several months of interest for the time a sale would take. Then check whether the loan is still repaid in full.

If it is, the LVR is doing its job. If it is not, the loan is either too large for the property, or the property is not one a short term lender should be relying on. The same logic explains the preference for standard, readily saleable properties in established markets, and for terms short enough that the market has little time to move while the loan is running.

Why does the type of loan matter as much as the market?

A falling market affects different loans very differently.

Short term loans against existing property are exposed for 1 to 12 months, against a property that already exists and can be sold.

Development and construction loans are exposed for longer, against a project whose value depends on it being finished, sold and settled. Rising construction costs, slower sales and falling values all bite at once. That combination sat behind the Bathla Group collapse in August 2026. HomeSec makes no development or construction loans.

Softening values in 2026 are exactly why the rules matter: a maximum 80% LVR on residential property, lower on commercial, short terms and no development exposure. The full set is on our lending rules page.

Want to see how a loan is protected in today’s market?

Every loan pack sets out the property, the loan and the risks. If you’d like to see one, register your interest and our Funding Manager will be in touch.