Cotality’s daily dwelling values index shows that Sydney’s and Melbourne’s housing markets are now experiencing price corrections, with values experiencing declines over the latest month and quarter:
In contrast, the other major capital cities – Brisbane, Perth, and Adelaide – continue to record strong value growth.
The primary driver of the decline in Sydney and Melbourne home prices is the surge in for-sale listings across both major markets.
As illustrated below by Justin Fabo from Antipodean Macro, listings in Sydney and Melbourne are tracking at historically high levels, meaning that buyers have considerably more choice and are less subject to FOMO (the “fear of missing out”) than in other major markets, where listings are tracking below historical norms.
Similar forces are in play in the auction market, where Sydney and Melbourne recorded the strongest auction volumes since December 2021, alongside the lowest final auction clearance rates since July 2022 in Sydney and April 2023 in Melbourne.
Source: Cotality
The following chart, which plots average monthly final clearance rates, shows that Sydney and Melbourne both recorded the lowest clearance rates of the year in March:
Both cities’ clearance rates were also down heavily from the same month last year.
Sydney’s average clearance rate in March 2026 was 56%, 7% lower than in March 2025. In March 2026, Melbourne’s clearance rate was 57%, which was 5% lower than in March 2025.
The outlook for both cities’ housing markets is poor.
The Reserve Bank of Australia has already delivered back-to-back 25 bp rate hikes in February and March. Financial markets are tipping another three rate hikes by the end of the year, which would lift the official cash rate to an 18-year high of 4.85% and the average discount variable mortgage rate to 6.75%, its highest level in more than a decade:
The latest forecasts from SQM Research suggest that if the official cash rate rises above 4.5% (“Scenario 2” below), then Sydney and Melbourne will record price declines of between -4% and -9% in 2026:
By contrast, the other major capitals are forecast to record solid growth in 2026, in part related to their lack of for-sale listings.
