House Prices Fall in All Eight Australian Capitals for First Time in 15 Years, Domain Data Shows

Australian house prices fell in every capital city in the September quarter, according to Domain's House Price Report. It is the first time in 15 years that has happened, and only the second time on record.

Combined capital city house prices dropped 4.7%, or $59,870, to a median of about $1.23 million. Domain's figures put it as the steepest quarterly fall on record.

The numbers, city by city

Perth fell hardest: 7.4%, or $88,664, to $1.115 million. The median now sits 8% below its March peak.

Brisbane dropped 5.4%, or about $66,000, to $1.15 million. That ended a 14-quarter growth run.

Sydney fell 4.7% to $1.66 million, a two-year low and its biggest quarterly drop in four years.

Adelaide slid 3% to about $1.095 million, a fall of more than $33,000 from June. That matches its steepest quarterly decline on record.

Melbourne lost 3.3% to $1.014 million, its third straight quarterly fall. It is 6.7% below its December 2025 peak.

Units did not escape. Prices fell 3.5% to $702,858, the sharpest quarterly drop in seven and a half years. Annual growth in combined capital city house prices turned negative for the first time in more than three years.

Why prices are falling

Domain chief residential economist Nicola Powell pointed to higher interest rates, persistent cost-of-living pressure and changes to housing investment tax policy. She said they had cut borrowing capacity and left buyers wary.

"What began as weakness concentrated in some cities has broadened considerably," Powell said. "The balance of power has shifted towards buyers."

Gerard Burg of data firm Cotality called it "a demand-led downturn." The Reserve Bank has lifted the cash rate to its highest level in 15 years, and a September hike cut borrowing power for buyers. One Melbourne buyer, Jessica Ongarello, told AAP her bank's revised calculation left her loan offer $100,000 lower than the original.

The tax changes are a separate and contested piece of the story. The Albanese government's May budget ended negative gearing and trimmed the capital gains tax discount. Labor has taken some of the blame for the slump. But those changes do not take effect until July 2027, and economists have largely pinned the falls on the RBA's rate hikes.

The government's position

Housing Minister Clare O'Neil has defended the policy. She said the slide reflects the cyclical nature of the market.

"This is the third or fourth downturn in house prices that we've seen just in the last decade," O'Neil said. "We do need to slow house-price growth around Australia, and if that is controversial to you, I'm happy to wear the controversy."

She also said the changes are permanent and will put a first-home buyer "on a level playing field with an investor" at auctions.

The expensive end is taking the hit

The damage is not even. Cotality data shows the most valuable quartile of Sydney homes fell more than twice as much as the cheapest quartile. Nationally, lower-value homes held up much better. Prices rose in Darwin's lowest-value quartile.

Property economist Cameron Kusher said pricier homes had posted the biggest gains in recent years, and fewer buyers can afford them now. He said the ultra-top end remained largely stable.

Burg said the median house "really appears kind of out of reach" of the median-income household across much of the country.

What comes next

Selling conditions have flipped. Homes are taking longer to sell, discounting has increased and auction clearance rates are lower. Powell said many capitals have their highest supply in years, which gives buyers with secure finances room to negotiate.

The rate outlook is the pressure point. RBA deputy governor Andrew Hauser said today, Oct. 21, that "hard choices" lie ahead and that the November meeting is live. He said inflation expectations are becoming embedded as the Middle East supply shock drags on, which he called "a central banker's nightmare." A softer September jobs figure has lengthened the odds of a rate rise on Melbourne Cup day, but has not taken it off the table.

Powell said she cannot see buyer confidence recovering until there is a rate cut, or at least talk of one. She puts that prospect in the latter part of next year. She also said Melbourne's median house price could end 2026 below $1 million.

Morgan Stanley economists forecast the market will bottom in the second half of 2027, with a peak-to-trough decline of as much as 15%. The RBA's November decision is the next test of whether that path gets longer.