McGrath Report 2027 flags Bathla fallout and a new cycle by mid-2027
Australia’s capital city housing markets are falling faster than official data suggests but are likely close to the bottom, according to John McGrath. His McGrath Report 2027 expects a new cycle to begin within months.
McGrath, who has worked through eight corrections in more than 40 years, said the current downturn feels like “the fastest fall in values I can remember”. While data providers are recording single-digit falls, he said “on the street, most big metropolitan markets are down 10–15% in the past six months”.
His own correction table puts the fall at more than 10% over the seven months since March, which he says puts this downturn on track to outpace the 2022–23 rate-shock correction. Official figures are more modest: Cotality’s Home Value Index shows national values are 5.2% below their March peak, after a sixth consecutive monthly decline in September.
Bathla collapse a risk for lenders
The report warns that developer Bathla Group’s collapse could have wider consequences than many expect. Bathla entered voluntary administration in August 2026 with around $3.4 billion in debt and creditor claims across 219 projects.
Lenders contributed more than $3 billion to those developments, according to the report, and McGrath believes the projects may need to be discounted by 30–50% to sell in a soft market. Administrators have also confirmed that some buyers’ deposits were not protected in trust accounts.
“I suspect the impact will be far greater, and reach far wider, than any of us have yet contemplated,” he said.
History points to a turn
Australia’s last five corrections lasted an average of 12.2 months, with an average price decline of 6%. On that track record, McGrath argued the capitals may already have done most of their falling. That outlook depends on interest rate rises ending soon, unemployment staying contained, and the war in the Middle East being resolved.
The first condition is already under pressure, with recent RBA commentary stoking fears of a fifth rate hike this year.
“We will be into the new cycle before the end of this financial year,” McGrath said.
Regional prices have flattened and could fall a further 7–10% over the coming year, he added.
First-home buyers gain ground
The report says the federal budget’s tax changes have already begun to reduce investor numbers in Melbourne, tilting the market toward first-home buyers, and could ease competition for owner-occupiers in Sydney. McGrath argued the changes to negative gearing and the capital gains tax discount will not improve affordability.
For buyers willing to act during the downturn, the report notes that markets have historically gained an average of 32% in the three years following similar corrections.
