Domain’s 2027 Property Forecast: Which Markets Set to Rise and Fall | Dr Nicola Powell

Australia’s property market has changed gears again. For the last few years, we’ve had a market driven by strong population growth, a chronic shortage of homes, tight rental markets and buyers who were desperate to get in before prices moved further away from them. But according to Domain’s latest FY2027 Forecast Report, we’re now entering a very different phase. Sydney and Melbourne house prices are forecast to fall over the next year, and Canberra is also expected to soften. At the same time, Brisbane, Adelaide and Perth are still forecast to grow, although at a much slower pace than we’ve seen over the last couple of years. And interestingly, Domain expects units to outperform houses in many of our capital cities as affordability pressures reshape the way Australians buy property. Now, I know some people will hear this and think, “Here we go again, the market is about to fall.” But that’s not the way I see it. And for property investors, that distinction matters. Because averages can be misleading. Headlines can be dangerous. And forecasts are useful only if you understand the assumptions behind them. Today I chat with Dr Nicola Powell about Australia’s property market and the latest Domain forecast. We unpack why the market is fragmenting across capital cities and what that means for buyers and investors. We look at how interest rates, borrowing capacity, and rising supply are changing market conditions. We discuss why houses and units are now moving in different directions, especially in Sydney and Melbourne. We explore why long-term investors should focus on cycles, location, and strategy rather than short-term headlines. Takeaways • Australia’s property market is fragmenting, with each capital city following different conditions. • Higher interest rates have reduced borrowing capacity and cooled buyer urgency. • Sydney and Melbourne are more sensitive to rate changes because prices are already high. • Rising supply is shifting negotiating power toward buyers in several markets. • Price downturns are usually shorter and milder than the growth phases before them. • Undersupply and construction costs continue to support medium-term property values. • Units are expected to outperform houses as affordability pressures intensify. • Well-located, owner-occupier-style apartments usually hold up better than investor stock. • Brisbane’s rapid growth has pushed unit prices toward Sydney-level territory. • Long-term success comes from patience, quality buying, and riding market cycles. Links and Resources: Answer this week’s trivia question here - https://www.propertytrivia.com.au/ • Win a hard copy of Michael Yardney's Guide to Investing Successfully. • Everyone wins a copy of a fully updated property report – What’s ahead for property for 2026 and beyond. Get a bundle of eBooks and Reports at: www.PodcastBonus.com.au https://propertyupdate.com.au/podcast... Get the team at Metropole Wealth Advisory to create a Strategic Wealth plan for your needs. Click here and have a chat with us. https://metropole.com.au/ https://metropole.com.au/strategic-pr... Michael Yardney Subscribe to my Property Update newsletter here. https://michaelyardney.com/ https://propertyupdate.com.au/propert... Dr Nicola Powell - Chief of Research & Economics for Domain: https://www.domain.com.au/news/author... Domain’s FY27 Forecast Report: https://www.domain.com.au/research/fo... Domain’s Property Cycle Report: https://s3.ap-southeast-2.amazonaws.c... Also, please subscribe to my other podcast Demographics Decoded with Simon Kuestenmacher – just look for Demographics Decoded wherever you are listening to this podcast and subscribe so each week we can unveil the trends shaping your future. Or click here: https://demographicsdecoded.com.au/ About The Michael Yardney Podcast | Property Investment And Wealth Creation Australia The Michael Yardney Podcast is one of Australia’s leading property investment podcasts, helping investors understand the Australian property market and build long-term wealth through strategic property investing. Each week we explore: • Australian property market updates • Property investment strategies in Australia • Melbourne property market trends • Sydney property market forecasts • Brisbane property investment opportunities • Capital growth property strategies • Property cycles in Australia • Negative gearing and tax strategy • Interest rates and their impact on property • Buyer’s agent insights and investment planning If you’re serious about building a high-performance property portfolio and creating financial freedom through real estate, this podcast will give you the clarity and strategy you need. Learn more at: https://propertyupdate.com.au https://metropole.com.au