Australian housing prices fall as rate hikes deter buyers

Economists confirm prices are on track to fall at least 10% following the Reserve Bank’s fourth rate increase this year, which has significantly reduced borrowing capacity for average earners. The central bank lifted the cash rate by 0.25 percentage points on Tuesday, taking it to 4.6 per cent. Canstar estimated this year’s four rate hikes have cut $47,400 from the borrowing capacity of someone earning an average annual full-time wage of $108,650.

Capital city markets show widespread weakness except Darwin

Home prices fell in nearly every suburb of Australia’s largest cities in September, with Brisbane recording the steepest monthly drop among capitals, while Darwin was the only city to see a rise. Property prices are falling in almost every suburb in Australia’s biggest cities. Brisbane’s home prices dropped 1.5% in September, with every suburb recording lower prices compared with June. The median Brisbane home was worth $1.05m, down by $59,000 since May, following a surge of 18% over the preceding 12 months.

Darwin was the only city where prices continued to rise, up 0.4% in September. Sydney median values dropped 1.4% in September and were down 8.6% from their record high in March, equating to a $112,000 decrease. Just four Sydney suburbs held steady in recent months. Melbourne prices were down 0.7% in September and down 6.4% since March, a decrease of $53,000.

The table below shows the monthly and annual changes for each capital city market.

Ninety-seven per cent of capital city suburbs were down in value over the three months to the end of September. Sydney home values are now 8.6 per cent below their February peak, while Melbourne values are 7.2 per cent below their November 2025 high.

National trends confirm deepening downturn in values and sales

Nationally, dwelling values are 5.2% below their March peak and sales activity has dropped sharply, with advertised stock rising and new listings falling as homes take longer to sell. National dwelling values fell 1.1 per cent in September. Homes are now worth 5.2 per cent less nationally than at their March peak.

Sales over the past three months were 19.1 per cent lower nationally than a year ago. The decline was sharpest in Brisbane, where sales fell 27.2 per cent. Sydney sales were down 26.5 per cent and Perth sales were down 24.2 per cent. Total advertised stock across capitals was 23.1 per cent higher than a year ago, while new listings coming onto the market were 9.2 per cent fewer. Capital city homes now take a median of 39 days to sell, up from 23 days a year ago.

Buyer agents note subdued spring market despite first-home scheme support

Industry observers say the spring buying period has failed to gain traction as hesitant buyers cite interest rates as their top concern, though demand remains stronger at the entry level due to government-backed lending. Buyer’s agent Joe Trucchio said the downturn had swept the city. "We’re fully into the spring buying carnival, and we haven’t seen it pick up the way that it had in previous years," he said. Trucchio noted interest rates have become the biggest conversation among hesitant buyers.

Housing prices would have to fall roughly 10% to offset a 1 percentage point increase in interest rates, but no suburbs have reached that threshold. Trucchio said dwellings on the cheaper end of the market had garnered more interest as first home buyers regained confidence. Strong entry-level demand has been observed in the government's 5% deposit scheme, which underwrites almost half of all first home loans. The Albanese government reported over 102,000 people had been supported with first home loans under the scheme in the year since it was expanded, averaging about 8,600 new first home buyers a month from October to May.

RBA cites housing weakness but rules out pause, warns of supply risks

The RBA governor acknowledged the housing market’s unexpected weakness before deciding to raise rates, cautioning that falling prices could deter new construction and worsen supply shortages. Michele Bullock said on Tuesday the central bank considered leaving rates on hold amid an unexpectedly weak housing market but ultimately decided to lift. She said falling prices would probably worsen housing supply by making new construction unprofitable.

The receding chance of interest rate cuts has made a longer downturn more likely. AMP chief economist Shane Oliver said the latest data supported forecasts of prices falling at least 10% nationally. He warned that rate hikes, tax hikes and poor confidence are the big drags but rising distressed listings with rate hikes and rising unemployment do risk a deeper fall of around 15%. Economists expect Australia’s housing shortage will force home prices back up in future.