The simultaneous nationwide retreat marks an unusual moment for capital city house prices, with Domain's September Quarter 2026 House Price report recording declines in every market it tracks.

The steepest city falls

Sydney's median fell 4.7% in the September quarter to $1.66m, a two-year low. Melbourne dropped 3.3%, its third straight quarterly fall and largest in four years, leaving the melbourne median house price at $1.014m. Perth recorded the sharpest drop of all, with Perth property prices falling a record 4.7% for the quarter, while Brisbane and Adelaide both logged their steepest quarterly falls on record.

Why the market is falling

Domain's chief residential economist Nicola Powell attributed the reductions to higher interest rates, persistent cost-of-living pressures and changes to housing investment tax policy. The data also suggests reduced borrowing capacity is stifling sales. Powell said the downturn has broadened geographically and across property types, with houses and units both falling.

A buyer's market with slow sales

Homes are taking longer to sell, buyers have greater scope to negotiate, and sellers need to be more realistic about price expectations, Powell said. For those waiting on the sidelines, she described the conditions as the best start to spring buyers have had, with many capitals holding the highest supply levels seen in years. Buyers with secure finances face opportunities that have been hard to find in recent years, she added.

That warning came as Powell described buyer sentiment as weak.

How long the downturn could last

Powell said prices could keep falling for many months and that she cannot envisage confidence changing until an interest rate cut is in view, a prospect she places in the latter part of next year. Morgan Stanley economists expect the australian property market forecast to bottom out in the second half of 2027.