Property market trends show upper-quartile home prices falling while affordable homes rise in value
Consensus Summary
The Australian property market is experiencing divergent trends in early 2026, with upper-quartile home prices falling while more affordable properties continue to rise in value. Data from Cotality shows Sydney’s top 25% of houses (worth $2.32 million-plus) dropped 2.4% in the three months to March, while Melbourne’s upper-quartile values fell 1.9%. In contrast, Sydney’s lower-quartile homes rose 2.5%, and Melbourne’s affordable segment increased 0.6%. Similar patterns are seen in Brisbane and Perth, where affordable properties outperformed higher-end markets. Analysts attribute the trend to affordability constraints, with median-income households struggling to service loans for pricier homes amid rising interest rates and cost-of-living pressures. The federal government’s expanded 5% Deposit Scheme has also boosted demand in the lower quartile, though experts note strong pre-existing demand in affordable housing. Westpac economist Matthew Hassan suggests the divergence is partly due to first-home buyers entering the market after the scheme’s expansion, while early 2026 trends were primarily driven by interest rate hikes rather than geopolitical factors like the Middle East war, which may impact April data.
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Key details reported by multiple sources:
- Sydney’s upper quartile house values (worth $2.32 million-plus) fell 2.4% in the three months to March 2026
- Melbourne’s upper quartile house values (worth about $1.37 million-plus) fell 1.9% in the three months to March 2026
- Sydney’s lower quartile house values rose 2.5% in the three months to March 2026
- Melbourne’s lower quartile house values rose 0.6% in the three months to March 2026
- Top-end Brisbane houses rose 3.7% while more affordable counterparts jumped 6.2% in the three months to March 2026
- Perth’s upper-end house values rose 5.7% while affordable houses rose 8.9% in the three months to March 2026
- Cotality data shows recent falls in property values are concentrated in the upper quartile of the market, while entry-level properties have risen in value
- Tim Lawless, Cotality research director, stated that housing affordability is a major constraint, with median-income households struggling to afford homes beyond the lower quartile
- Matthew Hassan, Westpac senior economist, attributed the trend to affordability constraints and the expansion of the federal government’s 5% Deposit Scheme last spring
- The property market has weakened in 2026 due to rising interest rates and economic uncertainty, according to Cotality data
Points of Difference
Details reported by only one source:
- Tim Lawless noted that a buyer on median household income buying a median-value home with a 20% deposit would need to spend 46% of pre-tax income on mortgage repayments (based on end-2025 data)
- Matthew Hassan mentioned that the war in the Middle East is starting to show through in April’s property data, such as weakness in the auction market and homeowners withdrawing scheduled auctions
- Hassan stated that the first three months of 2026 were influenced by interest rate rises and a shift in interest rate expectations, with the RBA tightening more than expected
Contradictions
Conflicting information between sources:
- No contradictions found between the two sources
Source Articles
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The type of home where prices are falling most right now
The property market is in the early stages of a downturn this year, but that’s not the case for all types of homes.