The forecast suggests Sydney house prices could fall by between $52,000 and $122,000 over FY27, while Melbourne houses may drop by $42,000 to $84,000, potentially taking the median below $1 million. Canberra is also expected to soften, though more moderately. By contrast, Perth, Brisbane and Adelaide are tipped to remain in positive territory, supported by population growth and ongoing housing shortages, even as growth slows from recent highs.

For existing mortgage holders, this creates a practical refinancing issue. A lower valuation can reduce usable equity and may push a borrower into a higher LVR band, where rates can be less competitive or lenders may apply tighter conditions. That does not mean households should rush into a decision, but it does make it sensible to review their position before assuming today’s equity buffer will still be available later.

Borrowing capacity is another pressure point. Domain estimates recent rate increases have already reduced borrowing power by around 7 to 8 per cent, and each additional 25 basis point rise could trim capacity further. This is especially important for households wanting to consolidate debt, fund renovations, switch to a sharper rate, or move from interest-only to principal-and-interest repayments. Before applying, borrowers should consider modelling repayments under more than one rate scenario, including the possibility that relief may not arrive until well into 2027.

The forecast also reinforces how local market conditions now matter more. A homeowner in Perth may be refinancing from a position of rising equity, while a Sydney or Melbourne borrower may face a more cautious valuation environment. That is where loan structure, timing, credit history, income stability and lender choice can make a meaningful difference. Working with mortgage brokers may help borrowers compare policies across lenders rather than relying on one bank’s view of their property and serviceability.

The key takeaway is calm preparation. Softer prices are not automatically bad news for refinancers, and stronger markets do not guarantee approval. What matters is knowing your current rate, equity position, repayment comfort level and refinancing objective. In a fragmented market, informed borrowers are better placed to act before rate changes, valuations or lending rules narrow their options.