New modelling shows Perth, Brisbane and Adelaide have a significant buffer against price falls
Australian housing markets outside Sydney and Melbourne would retain much of their pandemic-era growth even under a severe downturn scenario, according to new research from Cotality.
The property data firm's August Housing Chart Pack models the effect of 5%, 10%, 15% and 20% declines from peak dwelling values across the major capital cities.
The analysis finds that mid-sized markets — particularly Perth, Brisbane and Adelaide — have accumulated enough growth to withstand a significant correction, while Melbourne remains the most exposed.
"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," said Gerard Burg (pictured right), head of research at Cotality.
"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."
Source: Cotality
Sydney and Melbourne are already more than 5% below their respective peaks. Brisbane and Adelaide have entered modest downturns over the past two months.
Melbourne faces the greatest vulnerability, having seen little price growth over the past five years. Dwelling values peaked 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," 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."
Under a 20% decline scenario, Sydney's market would revert to approximately May 2021 levels. Brisbane could absorb a 20% correction and still sit around August 2024 values, while Adelaide would only fall back to around April 2024. Perth, which recorded the strongest growth cycle among the major capitals, would return only to approximately April 2025 levels under the same scenario.
Burg said the deterioration in buyer demand reflected a combination of affordability pressures, mortgage serviceability constraints, higher interest rates, cost-of-living pressures, weaker consumer confidence, and reduced investor activity following the federal budget.
"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."
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