Australian housing market decline hits top-end properties hardest in Sydney and Melbourne
Consensus Summary
Australian housing markets in Sydney and Melbourne are experiencing declines, with the top-end properties in the upper quartile suffering the most significant lossesâaround four per cent over the three months to May 2026. While Sydneyâs bottom quartile saw minimal growth (0.2 per cent), other price points in both cities have fallen due to rate hikes, global uncertainty, and federal budget policies. Perth remains an outlier, with gains in both its top and bottom quartiles, though momentum is slowing. Experts like Gerard Burg and Matthew Hassan agree that affordability pressures and borrowing constraints are limiting demand, particularly in expensive markets. Government incentives, such as the five per cent deposit scheme, are supporting the bottom quartile, but proposed changes to capital gains tax and negative gearing may further slow investment. Analysts predict a 12-month stabilization period, with spring market performance seen as a key indicator of broader softening.
â Verified by 2+ sources
Key details reported by multiple sources:
- House values fell about four per cent in both Melbourne and Sydneyâs upper quartile (top-end market) over the three months to the end of May 2026
- Sydneyâs bottom quartile saw a very modest 0.2 per cent growth while other price points fell
- Perthâs top quartile rose almost four per cent and its bottom quartile gained over six per cent in the same period
- Gerard Burg, Cotality head of research for Australia, stated that the top echelon of properties is harder to access due to affordability and borrowing capacity
- Matthew Hassan, Westpac senior economist, noted that the top quartile âruns hotter during upward swings and gets hit harder during correctionsâ
- The Reserve Bank raised interest rates three times consecutively in the three months to May 2026
- Federal governmentâs five per cent deposit scheme is helping keep competition in the bottom quartile
- Sydney-based buyerâs agent Michelle May observed investors pulling back, with more properties being passed in or taken off-market
- Gerard Burg warned Sydney could experience a more significant fall in house values due to accumulated value over time
- Matthew Hassan predicted it would take around 12 months for the market to stabilize
Points of Difference
Details reported by only one source:
- Julie DeBondt-Barker, Property Home Base director, said Melbourne first home buyers might find it âas good as it getsâ due to fewer investors competing
- Gerard Burg suggested Melbourne prices could rise in the medium term due to a growing population and a slowdown in construction boom supply
- Perth, Adelaide, and Brisbane markets are rising but losing momentum, with Perthâs gains cooling compared to late last year
Source Articles
The type of home that is getting âhit harderâ as house values fall
House values have fallen across almost all price points in Australiaâs two largest cities, with the biggest losses for sellers concentrated in one part of the market.
The type of home that is getting âhit harderâ as house values fall
House values have fallen across almost all price points in Australiaâs two largest cities, with the biggest losses for sellers concentrated in one part of the market.