Chart Pack shows why expensive homes are falling faster
Australia's housing correction is deepening, and stretched borrowing capacity is doing much of the work in deciding where the pain lands hardest.
Tim Lawless, Cotality's head of research, Asia Pacific, writing on LinkedIn, said constrained servicing power is pushing demand toward lower price points, where mortgage affordability hurdles bite less hard.
In Sydney, a household earning the median income and buying the median-priced dwelling with a 20% deposit would now direct close to 60% of gross income to mortgage repayments — a level of strain steering first-home buyers and owner-occupiers alike toward more affordable stock.
"Historically, premium housing markets tend to lead the broader cycle, both on the way up and on the way down," Lawless wrote.
He noted the gap between upper and lower quartile performance is beginning to narrow in some cities, "suggesting the downturn is becoming more broad-based rather than remaining concentrated at the expensive end of the market."
Premium homes still leading the fall
That pattern shows up clearly in the numbers. National dwelling values fell 3.1% over the three months to August, with annual growth easing to just 2.7%, according to Cotality's Monthly Housing Chart Pack for September. Selling conditions have softened in step, with the median time on market stretching to 39 days, up from 28 days a year ago, while vendor discounting has widened to 4.2% across the capitals — the highest level since January 2023.
The divergence between value tiers remains stark, continuing a pattern already evident in August. In Sydney, upper quartile house values (above $2.1 million) are down 10.7% from their peak, compared with a 5.4% decline across the lower quartile. Melbourne shows a similar split, with upper quartile houses ($1.25 million-plus) down 10.5% versus a 3.9% fall for homes under $755,000.
Gerard Burg, Cotality head of research, Australia, said the correction, while concentrated at the premium end, has broadened well beyond its original starting point.
"Early in the cycle, falling home values were largely confined to higher-priced properties in Sydney, Melbourne and Canberra," Burg said. "More recently, however, home values have also started declining across Brisbane, Adelaide and Perth, demonstrating that the downturn is now affecting a broader range of markets."
Sales slow while stock piles up
The broader data backs up the affordability story. National sales fell 2.7% over the year to August, with capital city volumes down 5.2% even as regional sales rose 1.8% — evidence that buyers priced out of the cities are looking further afield.
Total listings have climbed to more than 139,100 properties nationally, up 18.1% year-on-year, while auction clearance rates have held below 50% since early June, according to the same report.
For mortgage brokers, the combination of softening prices, stretched borrowing capacity, and rising stock levels points to a market increasingly favouring buyers who can move quickly on realistic budgets — particularly at the more affordable end.
