Australia’s housing market continues to split in two, with Sydney and Melbourne recording solid declines in value. In contrast, Perth, Brisbane, and Adelaide continue to power on, albeit at a slightly slower rate.
The weekend’s preliminary auction results remained weak, with the nation’s two largest markets – Melbourne and Sydney – again recording preliminary results below 60%, suggesting final auction clearance rates in the low 50s:
Source: Cotality
Auctions are far less common in the other capital cities, making them a less relevant indicator for those markets.
The heat has come out of the Sydney and Melbourne markets since December 2025 as rate-rise expectations firmed.
The fuel price shock from the Middle East conflict is amplifying buyer negativity, and auction clearance rates are now at levels historically associated with downturns.
Ray White’s chief economist, Nerida Conisbee, said Sydney and Melbourne home price growth had been soft for some time, and a small decline over several months suggested those markets had moved into a mild downturn.
“In contrast, other parts of the country are continuing to record strong growth, particularly Brisbane, Adelaide and Perth. This highlights how uneven the current cycle is, with the larger east coast capitals no longer leading the market in the way they have historically”, Conisbee said.
“For the mid-sized capitals, they are starting from a much stronger position with significantly higher price growth and tighter supply”.
“While conditions have softened slightly, they remain well-supported by underlying demand”.
“As a result, they are unlikely to move into negative growth in the near term unless there is a more material deterioration in economic conditions”, she said.
Conisbee’s point about “tighter supply” in Perth, Brisbane, and Adelaide is the key to their stronger growth performance.
As noted last week, SQM Research data shows that the number of homes for sale in Sydney and Melbourne is tracking at close to its highest level in at least 16 years:
In contrast, listings are scarce in the other main markets.
With the number of listings in Perth, Brisbane, and Adelaide scarce, competition for the small number of available properties is tight, and “fear of missing out” remains prevalent.
Thus, despite the RBA’s monetary tightening, the values of Perth, Brisbane, and Adelaide continue to rise.
In contrast, Sydney and Melbourne have an abundance of homes for sale, allowing purchasers to be more selective and decreasing the need to compete.
Furthermore, with prices falling and mortgage rates rising, “fear of overpaying” has become the prevailing sentiment among purchasers in Sydney and Melbourne.
