An expert has warned that Australia’s real estate market could soon crumble as he claims the prices across the country are reaching their peak.
Property Sharemarket Economics general manager Darren Wilson made the claim while referring to the long‑observed 18.6‑year real estate cycle theory.
The cycle describes the pattern in which rising land values and credit expansion build to a peak before triggering a major downturn, typically repeating every two decades.
Mr Wilson argued the theory that Australia’s housing market was near its peak was proven by the $550,000 sale of a tiny 89sq metre patch of dirt, a block less than half the size of a professional singles tennis court, north of Surfers Paradise.
Catherine and Nick Leon, who have a 22‑month‑old daughter, had been hunting for a home for six years before finally securing what is likely one of the smallest vacant blocks ever sold in Queensland.
The couple said they had scoured both established homes and empty land but found prices ‘out of control’.
The shocking sale of the fun-sized Southport block comes after a developer paid $1.25million for a 4metre-wide driveway in Newtown, Sydney, in February.
Mr Wilson told Daily Mail house prices had soared exponentially within a short period of time.
The vacant block on Meron Street in Southport (pictured) is just 89sq metres, arguably the smallest vacant block of land ever sold in Queensland
‘A quick review of real‑estate reports from the second half of 2020 shows Southport had a median house price of $545,000 and a median unit price of $382,000,’ he said.
‘The median house for sale back then was larger than 89sq.
‘Fast‑forward six years and the median house in the same area is approaching $1.6million – three times higher.’
Despite affordability falling to record lows and borrowers hitting their limits, Australia’s housing prices continue to climb, propped up almost entirely by chronic supply shortages, strong migration and policy‑driven demand.
Every major analysis agrees the country is drastically undersupplied.
That imbalance is the key force preventing any meaningful price correction, with national dwelling construction now forecast to fall 262,000 homes short of the Housing Accord target by 2029.
Property forecaster Scott Kuru said prices are being pushed higher by sheer scarcity, with listings at five‑year lows, rental vacancies hovering around one per cent and rising construction costs choking new supply.
‘Australians’ growing anxiety about housing has fuelled a familiar refrain – this must be a bubble, and it has to burst,’ he said.
A driveway on Church Street in Newtown (pictured) sold for $1.25million
Property Sharemarket Economics general manager Darren Wilson (pictured) said there are signs Australia’s property market is nearing the end of an 18 year price hike cycle
‘Mortgages seem enormous and the upward trajectory of home prices and rents looks unsustainable.
‘Many Australians experience a sense that something has to give without meeting the conditions for a classic price collapse.’
Mr Kuru said in a genuine housing bubble, excess stock pushes rental vacancies higher.
‘In Australia, the opposite is happening – tenants are competing fiercely for available homes, and rents continue to rise,’ he said.
‘The construction sector – the very engine needed to increase housing supply – is also under pressure.
‘Builder insolvencies have surged, while construction costs have risen sharply due to labour shortages, material price increases and supply chain disruptions.’
Mr Kuru said demand shows little sign of easing, with mortgage pre‑approval activity lifting in recent months, rents continuing to rise and population growth remaining strong.
‘These are not the hallmarks of a market about to implode. They are indicators of a system constrained by structural shortages.’
Property forecaster Scott Kuru (pictured) said Australians’ growing anxiety about housing has fuelled a familiar refrain – this must be a bubble, and it has to burst
Metropole director Michael Yardney said the 18‑year property cycle is a ‘seductive story’, not a reliable forecasting model.
‘A surprising number of commentators are quoting it – even some economists who should know better,’ he said.
‘They point to the crash of 2008, count forward 18 years and declare the next crash is due, as if the property market runs on a calendar rather than on people, credit and confidence.
‘The 2008 crash was driven by a global credit crisis. It wasn’t caused by property hitting a birthday – it was caused by credit markets breaking.’
Mr Yardney said the problem with the theory is that it isn’t harmless; it keeps investors waiting for a crash that never comes while the market continues climbing in the background.
He said Australia simply does not have the conditions that typically spark mass forced selling.
‘A property crash normally requires either a sharp lift in unemployment, a deep recession or a severe credit event, each leading to homeowners and investors being unable to keep up with mortgage payments and needing to sell urgently,’ he said.
‘Without a broad wave of forced sales and no buyers to absorb them you simply don’t get the mechanics of a crash.’
Australia’s home prices keep rising due to a chronic shortage in the supply of new homes
However, Mr Yardney said certain areas could see price falls in 2026.
‘Could some property types underperform? Absolutely,’ he said.
‘But a national crash needs widespread forced selling and evaporating buyers.
‘Right now, forecasts for 2026 show prices rising 5 to 10 per cent across most capitals, not falling.’
Cotality Australia research director Tim Lawless also does not subscribe to the 18-year cycle theory.
‘It’s very clear housing cycles respond to macro factors like monetary and fiscal policy settings, credit availability and sentiment,’ he said.
‘Broadly, the market moves with the ebbs and flows of supply and demand rather than a predetermined time frame.
‘In the current cycle, we are already seeing signs of the market slowing as affordability presents a larger barrier to housing participation along with macro factors like higher cost of living, higher rates and lower sentiment.’
Mr Lawless said for housing values to see a material fall housing supply levels would have to shift markedly higher.
‘There is always the risk of a shock event, but inherently these are impossible to predict,’ he said.
Senior economist Dr Joel Bowman said it expects record highs for homes across every capital city by the end of 2026.
‘For prices to really fall sharply, you’d typically need things like a big jump in unemployment or a serious oversupply of homes,’ he said.
‘That’s the pattern we’ve seen in other countries where housing markets have crashed.
‘In Australia, we’re looking at a very different picture. The jobs market remains strong, wages are growing, and we’re dealing with a housing shortage.
‘Unless there’s a sudden and significant shock to employment, the fundamentals simply don’t support the idea of a crash.’
