Australian property downturn nears 40-year record as Perth and Brisbane losses accelerate Capital-city home values have fallen 8.1 per cent in seven months, with Cotality warning the downturn could soon surpass the largest peak-to-trough decline recorded in at least four decades.
Australia’s housing downturn is approaching a 40-year record, with home values across the combined capital cities falling 8.1 per cent in just seven months as the decline spreads from Sydney and Melbourne to previously resilient markets including Perth, Brisbane and Adelaide.
New analysis from Cotality shows the seven-month decline is the fastest comparable fall in at least four decades, leaving the market just 0.1 percentage point short of the 8.2 per cent peak-to-trough downturn recorded between October 2017 and May 2019.
The figures also reveal a shift in market conditions, with Sydney recording the largest cumulative fall, Melbourne’s rate of decline moderating, and the mid-sized capitals experiencing their fastest downturns on record.
Cotality Head of Research Gerard Burg said the current cycle was approaching a significant historical milestone.
“The largest peak-to-trough downturn at least over past 40 years across the combined capital cities was 8.2% between October 2017 and May 2019. Next month, the current downturn looks set to surpass this fall.”
Sydney leads the decline as Melbourne slows Sydney and Melbourne were the first major capitals to enter the downturn, with Melbourne home values peaking in November 2025 and Sydney following in February 2026.
Sydney has since recorded the largest cumulative decline, with values falling 10.1 per cent from their peak to the end of October.
Melbourne values have fallen 7.8 per cent since November 2025, although the pace of decline has been noticeably slower than during previous downturns.
“Melbourne values have fallen 7.8% since their November peak, pulling back at a noticeably slower pace than during previous episodes such as the 2017-19 and 1989-92 cycles,” Mr Burg said.
“Meanwhile, Sydney has recorded the largest drop, down 10.1% from its market peak to the end of October. In contrast to earlier cycles, Sydney’s downturn is tracking marginally faster than the 2022–23 declines.”
However, the latest analysis shows the downturn is no longer being driven solely by Australia’s two largest housing markets.
Perth has recorded the second-largest cumulative fall nationally, with values down 8.9 per cent from their peak, followed by Brisbane at 8.3 per cent and Adelaide at 4.4 per cent.
While the declines in these markets remain smaller than Sydney’s in percentage terms, Cotality’s analysis shows they are unfolding at their fastest recorded pace.
“These mid-sized capitals are now experiencing their fastest downturn on record. Strong growth in home values in these markets post-COVID substantially stretched affordability metrics, increasing the demand-side pressures associated with rate hikes this year,” Mr Burg said.
Conditions have been more measured outside the major capitals, with combined regional markets recording a 3.1 per cent decline from their peak.
Cotality said signs of a downturn in Darwin and Hobart were yet to fully emerge. Stock levels reveal growing differences between markets The latest figures also highlight how differences in housing supply are influencing the pace of price falls across the capitals.
In the four weeks to 8 November, total advertised stock in Adelaide was 25.1 per cent above its five-year average, while Brisbane was 24.4 per cent above average and Perth was 8 per cent higher.
Melbourne, by comparison, had 5.3 per cent fewer properties available for sale than its five-year average.
Mr Burg said the balance between available supply and buyer demand was helping to moderate Melbourne’s downturn.
“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. A similar transition in other cities should eventually slow the declines elsewhere,” he said.
For agents, the figures point to increasingly varied selling conditions between markets, with the amount of competing stock becoming an important consideration when advising vendors on pricing and campaign strategies.
The broader national figures also indicate that properties are taking longer to sell and vendors are making larger price concessions.
According to Cotality’s November Housing Chart Pack, the median time on market increased to 41 days nationally over the three months to October, while vendor discounting widened for the eighth consecutive month to 4.5 per cent.
Annual sales volumes fell 11.2 per cent nationally, with weaker performance across the combined capitals than regional markets.
Auction conditions also softened, with the four-week average clearance rate falling to its lowest level since May 2020.
Despite the weaker market, new listings remained below average throughout spring, sitting 13.9 per cent below the same period last year and 15.7 per cent below the five-year average.
National dwelling values fell 3.9 per cent over the quarter and 2.8 per cent over the year to October.
Combined capital-city values declined 4.8 per cent annually, while regional values increased 3.4 per cent over the same period. Rate cuts seen as key to recovery While housing values have continued to decline, the rental market has remained comparatively resilient.
Annual rental growth moderated to 5.3 per cent nationally, with regional rental growth continuing to outpace the capitals.
Gross rental yields also increased as dwelling values fell and rents continued to rise, taking the national yield to 3.9 per cent.
However, the outlook for a broader housing market recovery remains uncertain following further increases in borrowing costs.
The Reserve Bank increased the cash rate by 25 basis points to 4.85 per cent in November, its fifth increase this year.
Mr Burg said a sustained improvement in housing market conditions would depend on buyers regaining both confidence and the financial capacity to purchase.
“A recovery in housing market conditions is unlikely until buyers have the confidence and financial capacity to return to the 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 currently appears unlikely before the second half of 2027,” he concluded.
With the combined capital-city market approaching its largest downturn in at least 40 years, the latest figures suggest agents will need to navigate increasingly different conditions across individual markets, particularly as stock levels, buyer demand and selling times continue to diverge.