Valuers Predict Further Falls, But Set Timeline for Turnaround

Property valuers are pointing to 12 months of deflated market activity ahead, with a potential pick-up in the third quarter of 2027. An Australian Property Institute survey of members has found an expected decline in values of 8 to 11 per cent. But API chief economist Sherman Chan told The Urban Developer that changes to negative gearing and capital gains tax, which take effect in July 2027, will trigger a return to growth in values. “Industrial is still firmly in positive territory, thanks in large part to demand for data centres and warehouses,” Chan said. “The office sector has been weak for quite some time, but there’s disparity within the sector itself.” API’s Australian Market Property Outlook for the fourth quarter is projecting further declines in price over residential markets. But Chan says that “our valuers’ community has actually put a date to the recovery”. “The expected decline that we found from our survey is not as bad as some of the earlier stories that we’ve heard. “So I feel that it’s a positive story…there is consistency across the board [from valuers in different markets].” ▲ API chief economist Sherman Chan says the expected decline “that we found from our survey is not as bad as some of the earlier stories that we’ve heard”. Confusion and negative sentiment around changes to tax treatment of property, in addition to the material impacts of those changes, are contributing to market movements. But as the new regulation becomes embedded and understood, confidence will return. “I think confidence is not the only problem here. So that’s one thing I want to clarify,” Chan said. “But it is a big part of that problem. “People are nervous because they don’t fully know what’s going on…the drip-feed of detail regarding the implementation of the tax changes is not helping.” Chan said that Queensland had experienced a significant reversion from the previous report in the series. The API index for the prior quarter had been revised downwards to 5.2 from 6.6, and the fourth quarter outlook at 4.5 is negative. However, residential was the only negative sector, with industrial, commercial and agricultural outlooks remaining positive in the Sunshine State. “The market was expecting Queensland to remain buoyant because of the Olympics and all the associated work in the lead up to it,” Chan said. “However, having spoken to locals, my read is that they understand all the internal challenges, for example, in getting workers to meet all of these development goals. “Queensland has suddenly realised that they’re not immune from this across-the-board downturn. So that’s why we’re seeing this massive decline in sentiment.” The API methodology includes surveying 384 property professionals and valuers, looking at property values in every state and territory. Results are then weighted by relative size of the property markets. “The evaluation results are not based on forecast numbers. So there’s no guesswork in the process,” Chan said. “[Valuers] are very risk averse because their reports need to be credible and defensible.” According to API, the findings align with the Cotality Home Values Index released on October 1, which showed prices 5.2 per cent below the March 2026 peak. The API report was released before the Domain September 2026 House Price Report, which recorded a decline of 4.7 per cent in the quarter . Meanwhile, a survey of CBRE valuers specialising in prestige residential markets has found that 53 per cent are expecting steady demand in their local market for the year ahead. That figure has declined from 72 per cent in the first quarter of 2026. Half of the CBRE valuers are reporting soft demand in prestige residential, an increase from 20 per cent in the first quarter, and 3 per cent a year ago.

Residential
Patrick Lau
Thu 22 Oct 26

Valuers Predict Further Falls, But Set Timeline for Turnaround

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