Australian house prices have registered their steepest decline on record, with up to $89,000 wiped off the median house price in some capital cities in just 90 days.
Australia’s typical multi-speed market, in which the capital cities are placed at different points in the property cycle, came to a grinding halt in September, with all capitals now trending downwards.
The Domain House Price Report for the September quarter revealed that median house prices fell in every capital city, marking the first time in 15 years – and only the second time on record – all capitals have recorded simultaneous declines.
Across the combined capitals, house prices fell by 4.7 per cent ($59,870) over the September quarter, reversing some of the sharpest price gains in cities that were previously leading the growth cycle.
Perth and Brisbane recorded the biggest price reversals, signalling a hard-to-ignore deterioration in market conditions, says Domain chief of research and economics Dr Nicola Powell.
Perth house prices slipped by 7.4 per cent ($88,664) to $1.115 million. The median today sits 8 per cent ($96,956) lower than the city’s peak in March.
Brisbane registered its first quarterly decline in almost four years, ending a 14-quarter growth cycle. The median house price fell by 5.4 per cent ($66,000) to $1.15 million.
“These were among the strongest markets of the previous growth cycle, but affordability constraints and weaker sentiment have caught up with them, resulting in some of the sharpest quarterly falls on record,” Powell says.
While house prices in Sydney and Melbourne have slipped since the March quarter, today’s widespread price adjustments across all the capitals show Australia has entered a new phase of the downturn, Powell says.
“What began as weakness concentrated in some cities has broadened considerably … the turnaround has come quickly. And it’s not just isolated to Sydney and Melbourne, which it previously was; it has broadened geographically, and it has deepened.”
The rare occurrence of all eight capitals experiencing price falls this quarter is at odds with Australia’s typical multispeed market, says PRD Real Estate chief economist Dr Diaswati Mardiasmo.
“This is an unusual moment in real estate because many times you would see certain capital cities acting a different way based on what is currently happening in that capital’s demand and supply levels,” she says.
“Even in times where cash rate changes have happened, whether it’s a cash rate rise or hold, the capitals have gone in different paths because they’re different markets.
“Now for the first time in a long time the capital cities have acted the same way in terms of prices declining, and this normally happens when there is a shock that is big enough to actually have that impact.”
The alignment of the capital cities is not surprising, given the confluence of multiple rate rises, cost-of-living pressures, changes to housing policies and the Iran war this year, Mardiasmo says.
All of these factors have converged to a point where “ it’s translating equally in all of the different markets across all of the different capital cities across Australia”, she says.
Sydney and Melbourne were first to take the hit in Q2 because they historically experience more elevated property cycles, says AMP deputy chief economist Diana Mousina.
Sydney house prices also recorded a significant decline of 4.7 per cent ($82,420) to $1.66 million.
Just over a year ago, in June 2025, the capital’s median house price cracked $1.72 million and was tipped to reach $1.8 million – now it’s weathering its third quarterly fall in a row.
“Sydney and Melbourne are the ones that have the strongest level of population growth across the capitals, usually speaking, so the cycles tend to be exaggerated because of that,” Mousina says.
“And if you tend to have a cycle that’s exaggerated on the way up, usually it’s the same thing on the way down.”
Perth has had the same trajectory, recording the biggest loss in the September quarter with an $88,664 hit to its median house price.
“ It’s because it had the strongest upturn before,” Mousina says. “When when prices go up so fast, it tends to happen that they overshoot.
“Prices run away from their fundamentals, and when you start to get a little bit of downside, it can swing the other way, and I think that’s what’s happening to Perth, and I think it’s going to happen to Brisbane as well.”
Though the downturn is now widespread, Mousina says falling house prices could be considered “a recalibration of the market”.
“A lot of people have this assumption that the Australian property market never experiences price declines, and it’s a really false narrative because there are plenty of cycles that go on both at the national level, but more importantly at the capital city level, regional versus urban, between houses and apartments,” she says.
“When you have a rate-rising cycle, you always tend to see downward pressure on property prices; I can’t think of any rate-rise cycle where we haven’t seen that happen.
“We have revised down our expectations for home price growth [and] think property prices will fall more than we expected six months ago because the changes in the budget went harder than we thought they would, and there have been more rate rises than we expected.
“The decline in prices is going to be larger than what we thought this time last year, but it’s only because of the environment that we’re in.”
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