Former boom markets lead the steepest quarterly drop Domain has recorded
House prices fell in all eight Australian capital cities over the September 2026 quarter, according to the Domain House Price Report. It is the first time in 15 years that every capital has declined at once, and only the second time on record.
Across the combined capitals, the median house price dropped 4.7%, or $59,870, in three months. Domain described it as the steepest quarterly decline it has recorded.
Domain chief of research and economics Nicola Powell (pictured) said the weakness, initially concentrated in Sydney and Melbourne, “has broadened geographically, and it has deepened”.
Separate data shows activity easing too. Cotality’s September 2026 Home Value Index found capital city homes took a median 39 days to sell, up from 23 a year earlier.
A rare national alignment
PRD Real Estate chief economist Diaswati Mardiasmo said the capitals usually move independently because each has its own supply and demand conditions. A synchronised drop, she said, typically follows “a shock that is big enough to actually have that impact”.
Mardiasmo attributed this year’s alignment to a combination of interest rate rises, cost-of-living pressure, housing policy changes, and the Iran war.
Rates remain front of mind, with the Reserve Bank (RBA) lifting the cash rate to 4.6% on 29 September, its fourth increase this year.
Perth and Brisbane take the biggest hits
The sharpest reversals came in cities that led the previous upswing. Perth’s median slid 7.4% ($88,664) to $1.115 million, leaving it 8% below its March peak. Brisbane lost 5.4% ($66,000) to $1.15 million, its first quarterly decline in almost four years and the end of a 14-quarter growth run. Powell put the weakness in both cities down to stretched affordability and softer buyer sentiment.
AMP deputy chief economist Diana Mousina said markets that rise fastest tend to overshoot their fundamentals and correct harder. She expects Brisbane to follow the path Perth is now on.
The longer-running slide in Sydney continued, with the median dropping $82,420 (4.7%) to $1.66 million. It was the city’s third consecutive quarterly fall after topping $1.72 million in June 2025. Melbourne, Adelaide, Canberra, Hobart, and Darwin each lost between $20,000 and $35,000.
Forecasts revised lower
Mousina said AMP had cut its home price expectations and now anticipates larger falls than it did six months ago. The budget changes proved tougher, and rate rises more frequent, than it had forecast.
Mousina said price falls were a normal feature of tightening cycles.
“I can’t think of any rate-rise cycle where we haven’t seen that happen,” she said.
Mousina described the downturn as “a recalibration of the market” rather than a break from how property cycles typically behave.
Brokers report the uncertainty is keeping buyers on the sidelines. Emerge Finance broker Luke Ashby told Australian Broker earlier this month that first-home buyers “don’t want to catch a falling knife, have negative equity within a short period of time”.
