House Prices Fall in Every Australian Capital for First Time in 15 Years as Sydney Hits Two-Year Low

House prices have fallen in every Australian capital city at the same time — the first time that has happened in 15 years and only the second time on record. According to Domain's September Quarter 2026 House Price Report, the downturn is no longer confined to one city but has spread across almost every major market.

In Sydney, the largest city, house prices fell 4.7 percent in the September quarter. That took the median house price down to $1.66 million, its lowest level in two years. Weak buyer confidence and pressure on sellers to be more realistic about price expectations are both cited behind the fall.

Melbourne's prices have fallen for a third consecutive quarter, dropping 3.3 percent in the September quarter — the city's largest quarterly house price fall in four years. The city remains, marginally, in the million-dollar club, with a median price of $1.014 million.

Perth recorded the sharpest drop, with house prices falling a record 4.7 percent. Brisbane and Adelaide also logged their steepest quarterly house price falls on record, underlining that the same picture is appearing in capitals large and small.

Domain chief residential economist Nicola Powell said the downturn has broadened geographically and also across property types, with both houses and units falling. Homes are taking longer to sell, there is greater scope to negotiate, and sellers are having to be more realistic about price expectations, she said.

Powell pointed to higher interest rates, persistent cost-of-living pressures and changes to housing investment tax policy as the drivers of the reductions. Together, she said, they have layered weak sentiment across buyers in particular.

She warned that Melbourne could close the year with a median house price below a million dollars. Reduced borrowing capacity is also stifling sales, the data suggests.

There is, however, another side to the market. The weaker conditions have created, for prospective purchasers with secure finances, one of the best starts to spring in years. Powell described it as a buyer's market, with many capital cities at their highest levels of supply in a number of years.

For buyers with secure finances and the capacity to transact, she said, that creates opportunities that have been difficult to find in recent years. In other words, a hard season for sellers has opened a window for prepared buyers.

How long that window stays open is uncertain. Powell said prices could continue to fall for many months to come, and that something needs to shift to alter the confidence to transact.

In her view, that shift is unlikely until there is an interest rate cut or even discussion that rate reductions are on the horizon — a prospect she places in the latter part of next year.

What happens to Australia's housing market in the coming months will therefore depend heavily on interest rates and cost-of-living pressures. For now, the figures show a rare, nationwide fall with no clear sign of an early turn.