Property data firm Cotality has modelled four downturn scenarios — declines of 5, 10, 15, and 20 per cent — across Australian capital cities, finding that mid-sized markets such as Perth, Brisbane, and Adelaide retain substantial buffers from five years of strong growth, while Melbourne's thinner gains leave it more exposed to price falls.
Australian home values have room to fall before erasing pandemic gains, Cotality modelling shows
Property data firm Cotality has modelled four downturn scenarios — declines of 5, 10, 15, and 20 per cent — across Australian capital cities, finding that mid-sized markets such as Perth, Brisbane, and Adelaide retain substantial buffers from five years of strong growth, while Melbourne's thinner gains leave it more exposed to price falls.
Melbourne dwelling values peaked at $840,000 in November 2025, according to Cotality. Cotality head of research Gerard Burg said a decline beyond 10 per cent in Melbourne would return values to pre-pandemic levels. By contrast, Burg said that even a 20 per cent fall from Perth's peak would leave the median dwelling value at roughly where it stood in April 2025, after what he described as one of the strongest growth cycles of any capital city.
Separate modelling from ANZ bank projects national property prices could fall 4.3 per cent in 2025 and a further 3.4 per cent in 2026, driven by a 14.5 per cent peak-to-trough decline in Sydney values and a 12.8 per cent fall in Melbourne. ANZ economists Madeline Dunk and Adam Boyton said the housing market had softened more than they had expected since their June forecast update, with Brisbane and Perth prices beginning to fall earlier than anticipated.
Auction clearance rates in Sydney and Melbourne are sitting well below 50 per cent, a level that has historically correlated with price falls, according to the article.
Reserve Bank of Australia Governor Michele Bullock said the board was monitoring the housing market downturn's flow-on effects but described it as not the bank's focus for future rate decisions, citing excess capacity, the tight labour market particularly in construction, the Middle East conflict, and the AI boom as the primary risks to the inflation outlook. The RBA's latest staff economic forecasts see house prices continuing to decline gradually for a period. Financial markets are currently pricing a 60 per cent chance the RBA will raise the cash rate by a further 0.25 percentage points by year-end, which would take it to 4.6 per cent.
- The source does not state the baseline dates from which the ANZ peak-to-trough decline figures of 14.5 per cent for Sydney and 12.8 per cent for Melbourne are measured.
- The source does not state the current median dwelling values for Sydney, Perth, Brisbane, or Adelaide against which the Cotality scenarios would apply.
- The source does not state what level inflation currently sits at, only that it has been declining every month since March.
- The source does not state which specific tax policy changes Dunk, Boyton, and Mardiasmo refer to as affecting the market.
- The source does not establish the current cash rate from which a 0.25 percentage point rise would reach 4.6 per cent, implying a current rate of 4.35 per cent, but does not state this explicitly.
- The source does not state the methodology or data sources underlying the Cotality modelling scenarios beyond identifying Cotality as a property data firm.
Read the original at ABC News Australia