Australia house prices post record 4.7% quarterly fall as every capital drops

House prices across Australia's capital cities fell 4.7% in the September quarter of 2026, the steepest three-month drop on record, property group Domain said in a report released on Thursday, October 22, 2026. Prices fell in every capital city at the same time for the first time in 15 years — only the second time on record — as a run of interest rate rises and cost-of-living pressure drained demand.

The numbers

The combined capital-city median house price fell by about A$59,870 in three months to roughly A$1.23 million. It was the second quarter in a row of falling house and unit prices, and annual house-price growth turned negative for the first time in more than three years.

City	Quarterly change (houses)	Median house price	Note
Combined capitals	−4.7%	≈A$1.23m	Steepest quarterly fall on record
Perth	−7.4%	≈A$1.12m	Record fall; units also a record −6.5%
Brisbane	−5.4%	≈A$1.15m	Ends almost four years of growth
Sydney	−4.7%	≈A$1.66m	Biggest fall in four years
Melbourne	−3.3%	≈A$1.01m	Down 6.7% from December 2025 peak
Adelaide	−3.0%	≈A$1.10m	Matches its record quarterly fall
Units, combined capitals	−3.5%	A$702,858	Sharpest fall in 7½ years

Domain did not publish detailed figures for Canberra, Hobart and Darwin in the headline release, though it said prices fell in every capital. In Darwin, the cheapest quarter of homes still rose in value.

Why prices are falling

Economists point to borrowing costs. Three consecutive interest rate rises have cut how much buyers can borrow and hit confidence. "The balance of power has shifted towards buyers," said Nicola Powell, Domain's chief residential economist, who linked the decline to higher rates and living costs reducing both borrowing capacity and buyers' willingness to act.

Gerard Burg of property data firm Cotality called it "a demand-led downturn". The falls are not even within cities: in Sydney, the most expensive quarter of homes lost value at more than twice the rate of the cheapest, as fewer buyers can afford the top end.

Property economist Cameron Kusher said changes to investment taxes in May's federal budget played a part, but noted prices had peaked last year and were already sliding. "Confidence has really evaporated," he said.

Background

Australian home values rose strongly through 2025, with Sydney's median house price reaching a record of about A$1.75 million in late 2025 and forecasters predicting further gains in 2026. The turn has been sharp: Brisbane, Perth and Adelaide — the fastest-growing markets of recent years — are now among the biggest fallers, and Melbourne's median is close to dropping below A$1 million for the first time since June 2021.

What it means for buyers and sellers

• Buyers have more room to negotiate. Homes are taking longer to sell and discounting is more common.
• Sellers are lowering price expectations. Auction activity has roughly halved from a year ago, with about 1,423 auctions across the capitals last week.
• Homeowners with mortgages face higher repayments at the same time as their equity shrinks.
• The wider economy may feel a "wealth effect", as falling home values make households more cautious about spending.

For South Asian migrants and students — large communities in Sydney, Melbourne and Perth — the downturn may make buying a first home slightly easier for those with secure finance, but higher rates still limit borrowing.

What happens next

Kusher expects the downturn to "drag on a bit longer than people expect", probably until interest rates are cut again, and said prices are unlikely to return to their previous peaks in the short term. The Reserve Bank of Australia's next rate decision and the next quarterly inflation figures will be key signals. Monthly home value indexes due at the start of November will show whether the decline is slowing or speeding up.