- Australia's housing market is poised to see its deepest peak-to-trough decline in 40 years
- The national housing downturn, intially led by Melbourne and Sydney, is now being driven by the mid-sized capitals
- Perth, Brisbane, and Adelaide are now experiencing their fastest downturns on record
Home values across Australia's capital cities are down 8.1% in seven months, the fastest decline recorded in more than 40 years.
It leaves the market just 0.1% shy of the deepest peak-to-trough decline in recent history.
Cotality's head of research Gerard Burg said he expects the current cycle to eclipse the benchmark next month.
"The largest peak-to-trough downturn, at least over the past 40 years across the combined capital cities, was 8.2% between October 2017 and May 2019," he said.
"Next month, the current downturn looks set to surpass this fall."
Mid-sized capitals lead the plunge
Property values in Perth, Brisbane, and Adelaide are now recording an unprecedented rate of decline after initially holding values for longer than the big markets of Sydney and Melbourne.
"Melbourne and Sydney led the early stages of the downturn, peaking in November 2025 and February 2026 respectively," Mr Burg said.
Melbourne values have fallen 7.8% since their peak, dropping at a slower pace than previous downturns in 2017-19 and 1989-92.
But it is Sydney that's so far seen the largest drop, down 10.1% from its market peak, as at the end of October.
In contrast to earlier downturns, Sydney's decline is tracking marginally faster than its 2022-23 fall.
Downturn shifting gears
Mr Burg said the next phase of the downcycle now sees the nation's most resilient mid-sized capitals - Perth, Brisbane, and Adelaide - driving the national plunge in home values.
"In cumulative terms, Perth has followed closely behind Sydney to record the country's second largest decline to date - down 8.9% from its peak," he said.
Brisbane has also seen steep falls of 8.3% while Adelaide is down 4.4%.
"These mid-sized capitals are now experiencing their fastest downturn on record," he said.
All three markets had seen strong growth in home values post-COVID, stretching affordability metrics before their record steep declines.
A tale of many markets
By contrast, conditions across the remainder of the country have remained relatively measured.
Combined regional markets have seen values pull back by 3.1% from their peak so far, tracking at a slower and steadier pace than previous downturns.
Meanwhile, signs of a downturn in both Darwin and Hobart are yet to fully emerge with values climbing 0.6% and 0.5% respectively in October.
Sales plummet nationally
Home sales have now fallen on an annual basis for 10 consecutive months as buyer demand continues to weaken.
The traditional spring selling season also failed to materialise as markets felt the effects of 2026's five cash rate increases as well as investor tax changes announced in the May federal budget.
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Around 116,000 homes transacted in the three months to October, roughly 18% below the five-year average.
Year on year, the decline in annual home sales has been led by Perth (down 21.4%) and Brisbane (down 17.8%) while Canberra and Hobart saw sales volumes rise, up 8.9% and 0.8% respectively.
New listings also remained subdued, tracking 15.7% below the five-year average over the last four weeks.
Yet despite fewer properties being brought to market, total listings continue to rise as homes remain for sale for longer.
The median time on market nationally increased to 41 days in the three months to October, up 24 days from a year ago.
Both the combined capital cities and combined regionals have hit their highest time-on-market levels since COVID in 2020.
Not surprisingly, buyers continue to wield more negotiating power with national median vendor discounting widening to 4.5% over the three months to October - up from 3.1% a year ago.
This is now the largest discount figure since mid-2019 and the eighth consecutive month of widening with Brisbane (5.6%) and Perth (5.3%) seeing the largest discounts over the year.
What's ahead?
Mr Burg noted the supply side of the market is beginning to show early signs of adjustment.
The total stock available for sale in Melbourne sat 5.3% below the five-year average in the four weeks to 8 November, compared with 25.1% above average in Adelaide, 24.4% above average in Brisbane, and 8.0% above average in Perth.
"A better balance between available supply and demand in Melbourne means home values in the city are falling at the slowest pace of the major capitals," he said.
However, he doubted there will be a recovery in housing market conditions until buyers have the confidence and financial capacity to return to market.
"Affordability and investor policies are likely to remain constraints, meaning it is likely that rate cuts from the Reserve Bank will be necessary, which appears unlikely before the second half of 2027," he said.
The Reserve Bank's monetary policy board will meet for its final cash rate deliberation for the year on 7-8 December with markets widely expecting the rate will hold at 4.85%.
It's Australia's highest cash rate in 18 years.
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| Lender | Home Loan | Interest Rate | Comparison Rate* | Monthly Repayment | Repayment type | Rate Type | Offset | Redraw | Ongoing Fees | Upfront Fees | Max LVR | Lump Sum Repayment | Extra Repayments | Split Loan Option | Tags | Features | Link | Compare | Promoted Product | Disclosure |
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| Promoted | Disclosure | ||||||||||
6.20% p.a. | 6.20% p.a. | $3,062 | Principal & Interest | Variable | $0 | $0 | 90% | Disclosure |
