Canberra house prices could fall by as much as $43,000 over the next financial year, while unit prices are forecast to decline by up to $19,000, according to Domain’s FY27 Housing Market Forecast.

The property group says Canberra is expected to experience moderate price declines as higher interest rates continue to weigh on borrowing capacity and housing affordability.

Nationally, Domain forecasts house prices across the combined capitals will remain broadly flat, although Sydney and Melbourne are expected to record the largest falls.

Sydney house prices are tipped to decline by between $52,000 and $122,000, while Melbourne prices could fall by between $42,000 and $84,000, potentially pushing the city’s median house price below $1 million.

In contrast, Brisbane, Adelaide and Perth are forecast to remain in positive territory, supported by population growth and housing shortages.

Domain chief economist Nicola Powell said the market was entering a more fragmented phase, with affordability becoming the dominant factor influencing buyer behaviour.

She said buyers were increasingly turning to units and lower-priced properties as higher interest rates reduced borrowing capacity.

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