ANZ flips housing forecast: Prices to drop 2% as Middle East tensions bite

ANZ has revised its housing market forecast, now predicting a drop in house prices this year. The change follows escalating tensions in the Middle East, which have disrupted economic confidence. Just weeks ago, the bank had expected a 2% rise in property values.

The conflict between Iran and the US, which began on 28 February 2026, has sent shockwaves through global markets. Oil prices surged by over 35% in the first week alone, pushing up borrowing costs for homebuyers.

Before the conflict, the housing market had remained stagnant for three years. Buyer confidence had only recently returned to normal levels. But the outbreak of war has reversed that progress, sparking inflation fears and dampening demand.

Global oil prices have seen dramatic swings since late February. Brent crude jumped from pre-war levels to over $106 per barrel by 26 March, after a brief dip to $102.22 when diplomatic talks raised hopes. The volatility has driven up wholesale mortgage rates, forcing lenders to increase interest charges for borrowers. ANZ now expects house prices to fall by 2% by the end of 2026. If the conflict drags on, the decline could deepen further. Home loan rates may climb higher in the coming weeks, adding pressure on households. A recovery is not expected until 2027. ANZ predicts modest price growth once economic conditions stabilise.

The Middle East conflict has reshaped ANZ's housing outlook, turning an anticipated 2% gain into a projected 2% loss. Rising oil prices and mortgage costs are squeezing buyers, while uncertainty weighs on the market. Any prolonged instability could push prices down even further before a rebound in 2027.