Every capital city in decline

Australian house prices are falling across all capitals simultaneously for the first time in 15 years and the second time on record, the Domain September Quarter 2026 House Price report shows. The downturn is national, but the pain is unevenly spread.

• Perth recorded the sharpest drop, a record 4.7% quarterly fall
• Brisbane and Adelaide also logged their steepest quarterly house price falls on record
• Sydney fell 4.7% in the September quarter to $1.66m, a two-year low
• Melbourne slumped 3.3%, a third consecutive quarterly decline and its largest in four years, leaving the median at $1.014m

Why prices are falling

Domain's chief residential economist Nicola Powell said the downturn has broadened both geographically and across property types, with houses and units also falling. She pointed to higher interest rates, persistent cost-of-living pressures and changes to housing investment tax policy, while the data shows reduced borrowing capacity is also stifling sales. Weak buyer sentiment has been layered on top, and Powell warned that Melbourne's median could slip further.

What it means for buyers and sellers

Powell said homes are taking longer to sell, giving buyers greater scope to negotiate and forcing sellers to be more realistic on price. In her view, the falling market offers buyers the best start to spring, with many capital cities at their highest levels of supply in years.

Outlook

Powell said she cannot envisage confidence changing until an interest rate cut is in prospect, which she expects in the latter part of next year, and prices could keep falling for months. Morgan Stanley economists predict the market will bottom out in the second half of 2027, with a downturn of up to 15% from peak to trough.