Sydney, Melbourne hit first house price falls in years as Perth surges ahead
- Sydney and Melbourne house prices slipped in the March quarter as affordability pressures and tighter borrowing capacity weighed on demand.
- Perth defied the downturn, recording a 5.7% quarterly jump and leading the nation with 24.6% annual growth.
Australia’s two largest housing markets have hit a turning point, with a new Domain report showing Sydney and Melbourne house prices slipping over the March quarter as affordability pressures and tighter borrowing capacity begin to bite.
In Sydney, house prices edged down 0.04% ($772) over the quarter to $1.79 million, snapping a three-year growth streak.
Melbourne saw a sharper fall, with prices down 0.6% ($6,357) to $1.083 million, marking the first quarterly decline in 18 months and unwinding some of the gains from late last year.
Despite the quarterly dips, annual growth stays in positive territory, up 6.6% in Sydney and 4.4% in Melbourne, though the pace has clearly slowed.
Affordability pressures reshape buyer demand
Higher interest rates and tighter borrowing capacity are increasingly influencing buyer behaviour, with demand becoming more cautious and price-sensitive.
Units are proving more resilient than houses as buyers shift toward lower entry points.
Sydney unit prices rose 0.6% over the quarter, extending a 13-quarter growth streak. Meanwhile, Melbourne unit prices dipped 0.4%, but annual growth still strengthened to 5.5%, the strongest in more than four years.
Domain’s Chief Residential Economist, Nicola Powell, said the declines in Sydney and Melbourne are a mix of tightening borrowing conditions and changing buyer sentiment.
“Buyers haven’t disappeared, but they’re behaving very differently. There’s less urgency, more negotiation and a much sharper focus on affordability," Dr Powell said.
Perth defies downturn
While Sydney and Melbourne cool, Perth tells a different story.
Recent house price changes across capital cities
Capital City | Mar-26 | Dec-25 | Mar-25 | Quarterly change | Annual change |
Sydney | $1,791,643 | $1,792,415 | $1,681,183 | -0.04% | 6.6% |
Melbourne | $1,082,728 | $1,089,085 | $1,037,453 | -0.6% | 4.4% |
Perth | $1,178,522 | $1,114,907 | $945,726 | 5.7% | 24.6% |
Brisbane | $1,212,195 | $1,162,884 | $1,007,166 | 4.2% | 20.4% |
Adelaide | $1,099,293 | $1,045,371 | $944,599 | 5.2% | 16.4% |
Source: Domain’s March Quarter House Price Report
As shown above, house prices in Perth jumped 5.7% ($63,615) over the March quarter, to a record $1.179 million. This extends the city's 14-quarter growth streak - the longest uninterrupted stretch since the 2000s.
Despite momentum cooling from the previous quarter’s peak when Perth joined the “million dollar club,” annual gains still lead the nation at 24.6%.
Perth's unit market is accelerating even faster, with prices rising 6.0% to $700,351 and annual growth reaching 27.8%, the highest nationally since 2006.
“Perth remains a standout. Prices continue to rise strongly due to extremely low supply, above-average population growth and affordability constraints being far less binding than in Sydney and Melbourne,” said Dr. Powell.
“Houses in the most expensive markets are feeling the interest rate pressure first, while units are holding up better as buyers reset expectations and look for safer, more accessible price points.”
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