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After years of growth, Australia’s $12.6 trillion property market is losing steam, with house prices falling in our two biggest capitals in the first quarter of 2026. Experts predict the trend will spread to other cities shortly, creating a rare opportunity for prospective buyers.
Australia’s housing market remains one of the most expensive in the world, driven by a longstanding imbalance between supply and demand. But growing global uncertainty – fuelled largely by the current conflict in Iran – is making buyers more cautious, with realestate.com.au reporting that auction clearance rates have dipped below 50 per cent.
According to the latest housing report from Cotality, Sydney home prices fell 0.02 per cent in the first quarter of the year, while Melbourne’s fell by 0.06 per cent. Together, the two cities make up roughly 55 to 60 per cent of Australia’s $12.6 trillion housing market, meaning their performance is enough to influence the direction of the broader market.
Meanwhile, other capitals continued to grow, with Perth home prices increasing 7.3 per cent in the March quarter, Brisbane by 5.1 per cent, Adelaide by 3.6 per cent, Darwin by 3.4 per cent, Hobart by 2.5 per cent and Canberra by 1.4 per cent. But that momentum may not last, with experts expecting these markets to follow suit as rising living costs and higher interest rates dampen borrowing and demand.
We saw a similar pattern in Australia at the start of Covid, when the market briefly stalled and prices dipped for a few weeks. But the slowdown didn’t last long, with values rising by more than 30 per cent over the next year.
According to realestate.com.au, “The upside may not be as steep this time, but this current flat period means buyers who are able to get into the market now have an opportunity.”
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