Overview
- Sydney: Already down over 5% from its peak, but even a 20% downturn would only return values to May 2021 after massive pandemic gains.
- Melbourne: Has the smallest buffer of any capital, with a decline beyond 10% returning dwelling values to pre-pandemic levels.
- Perth, Brisbane and Adelaide: These mid-sized capitals retain much of their five-year growth, giving them a sizeable buffer against further declines. A 20% fall in Perth only resets values to April 2025.
Five years of growth gives mid-sized housing markets a sizeable buffer against downturn
Double-digit declines in home values would make little dent in the gains accumulated across mid-sized housing markets during Australia's five-year housing boom, according to new analysis modelling a range of downturn scenarios.
Cotality’s August Housing Chart Pack models what a 5%, 10%, 15% and 20% decline from peak dwelling values would mean across the major capitals. The Chart of the Month shows Melbourne has relatively little buffer after years of subdued growth, while the mid-sized capitals of Perth, Brisbane and Adelaide would retain much of the value gained during their recent housing booms.
Cotality Head of Research Gerard Burg said with Sydney and Melbourne housing values already more than 5% below their respective peaks, and Brisbane and Adelaide entering a modest downturn over the past two months, the analysis provided useful context around how a deeper downturn could play out in different markets.
"There's been plenty of discussion about how far housing values could fall, but the same percentage decline doesn't have the same impact everywhere," Mr Burg said.
"Markets such as Perth, Brisbane and Adelaide recorded exceptional growth over the past five years, giving them a more significant buffer against declines than cities where values have been comparatively flat."
He said Melbourne had the least room to absorb further price falls after years of subdued growth, with dwelling values peaking at $840,000 in November 2025.
"Melbourne's home values have recorded very little growth over the past five years, meaning a decline beyond 10% would return values to pre-pandemic levels," Mr Burg said.
"Conversely, even if Perth's housing market fell 20% from its peak, the median dwelling value would still be around where it was in April 2025 after recording one of the strongest growth cycles of any capital city."
What would a downturn mean for your city?
Sydney
Already more than 5% below its peak, even a 20% downturn would only take Sydney's housing market back to around May 2021, highlighting the scale of the gains accumulated during the pandemic boom.
Melbourne
Melbourne has the smallest buffer of any major capital city, with a decline beyond 10% returning dwelling values to pre-pandemic levels after five years of subdued growth.
Brisbane
Despite entering a downturn only two months ago, Brisbane could absorb a 20% correction and values would still be around August 2024 levels after one of the country's strongest growth cycles.
Adelaide
Even a 20% decline would only return Adelaide's housing market to around April 2024, underlining the depth of its recent value growth.
Perth
Perth has the largest buffer of the major capitals, with a 20% downturn returning dwelling values only to around April 2025 after the nation's strongest recent growth cycle.
What’s driving the downturn
Mr Burg said affordability pressures and mortgage serviceability constraints first emerged in higher-value markets before higher interest rates, cost-of-living pressures, weaker consumer confidence and reduced investor activity following the Federal Budget weighed more broadly on buyer demand.
He said the analysis was intended to illustrate the implications of a range of downturn scenarios rather than predict where home values would ultimately land.
"Although housing values are falling across more cities, underlying supply and demand conditions remain quite different,” he said.
“Markets that experienced the strongest growth over recent years are entering this downturn from a much stronger position. Understanding where values would return to under different scenarios provides useful context for buyers, sellers and policymakers, particularly given how differently each capital city has performed over recent years."
Other key highlights from the Cotality Housing Chart Pack, August 2026
- Australia's housing market is valued at $12.4 trillion across 11.5 million dwellings, accounting for 56.8% of household wealth.
- Australia's Home Value Index fell 0.7% in July, the largest monthly decline since December 2022, with Brisbane down 0.6% and Adelaide down 0.2%.
- National sales volumes fell 0.8% over the year to July, with combined capital city sales down 3.5% while regional sales rose 4.2%.
- Homes took a median 35 days to sell over the three months to July, while the national median vendor discount widened to 3.8%.
- Auction clearance rates fell from a peak of around 66% in February to the low 40% range by the end of July, signalling weaker buyer demand and easing price growth.
- Annual rental growth held at 5.9% in July, continuing to outpace wage growth of 3.3%, while gross rental yields rose to 3.7%.
