Domain's September Quarter 2026 House Price Report shows house prices declining in every Australian capital city. The report identifies this as the first such decline in 15 years and only the second recorded occurrence.
Domain recorded a 4.7% fall in Sydney house prices during the September quarter to $1.66 million, a two-year low. Domain recorded Melbourne's third successive quarterly decline, with prices dropping 3.3% in the September quarter to a median of $1.014 million. Melbourne experienced its biggest quarterly house price decline in four years, although the median remained slightly above $1 million. Domain recorded the steepest decline in Perth, where house prices fell by a record 4.7%. Brisbane and Adelaide each experienced their largest recorded quarterly house price declines.
Domain chief residential economist Nicola Powell said the downturn had spread geographically and now affected both houses and units. Powell said homes were spending longer on the market. Powell said buyers had more room to negotiate and sellers were having to adopt more realistic price expectations. Powell attributed the reductions to higher interest rates, continuing cost-of-living pressures and changes to housing investment tax policy. Powell said these factors had weakened sentiment, particularly among buyers. Powell said Melbourne's median house price could finish the year below $1 million. The data also suggest that reduced borrowing capacity is restraining sales.
The statistics indicate weaker confidence among buyers and sellers. However, Powell said the downturn had given prospective buyers the most favorable start to spring in years. Powell described conditions as a buyer's market, with many capital cities recording their highest housing supply levels in several years. Powell said buyers with secure finances and the ability to complete purchases had opportunities that had been scarce in recent years.
Powell said prices could keep falling for many months. Powell said confidence to transact needed a catalyst and was unlikely to improve before an interest rate cut or discussion of approaching rate reductions. Powell placed that prospect in the latter part of next year. Morgan Stanley economists similarly forecast that the market would reach its lowest point in the second half of 2027. Morgan Stanley economists expect the decline from the market's peak to its lowest point to reach as much as 15%.
Australian House Prices Drop in All Capital Cities for First Time in 15 Years
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Summary
Australian house prices fell in all capital cities in the September quarter 2026, the first decline in 15 years. Interest rates have played a key role in the downturn, with Sydney prices down 4.7% to $1.66 million and Melbourne prices at $1.014 million after a 3.3% drop. Perth saw the sharpest fall at 4.7%, while Brisbane and Adelaide also recorded major declines. Domain’s Nicola Powell linked the slump to higher interest rates, cost-of-living pressures, and tax policy changes. A buyer’s market now dominates, with weak confidence and rising supply. Morgan Stanley forecasts prices could fall up to 15% by mid-2027. Amid this shift, altcoins to watch may gain attention as investors seek alternative assets.
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