New analysis from property data firm Cotality reveals how potential housing market downturns of 5, 10, 15, or 20 per cent could affect property prices across Australia's capital cities.

According to Cotality head of research Gerard Burg, Melbourne's housing market, which peaked at a median dwelling value of $840,000 in November 2025, has a relatively thin buffer. "A decline beyond 10 per cent in Melbourne would return values to pre-pandemic levels," Burg said.

In contrast, cities like Perth, Brisbane, and Adelaide have experienced exceptional growth over the past five years, providing a stronger cushion against price falls. Burg noted, "Even if Perth's housing market fell 20 per cent from its peak, the median dwelling value would still be around where it was in April 2025 after recording one of the strongest growth cycles of any capital city."

Supporting this outlook, modelling from ANZ forecasts property prices could drop by 4.3 per cent in 2026 and by 3.4 per cent in 2027 amid the ongoing market downturn. Economists Madeline Dunk and Adam Boyton commented, "Since our last forecast update in June, the housing market has softened a little more than we were expecting," with Sydney and Melbourne prices declining slightly more than anticipated, and Brisbane and Perth seeing earlier falls.

Reserve Bank of Australia (RBA) governor Michele Bullock stated the board is monitoring the housing market's flow-on effects but emphasized it is not the primary focus for future interest rate decisions. She highlighted other key inflation risks including "excess capacity, tight labour market, particularly in some areas like construction, the Middle East conflict, [and] the AI boom."

While a 20 per cent fall in housing prices is considered by some as a significant swing, the modelling underscores the varied resilience of Australia's housing markets depending on recent growth patterns.

Sources