How Far Could House Prices Fall? A City-by-City Look

New Cotality modelling shows Perth and Brisbane have strong price buffers, while Melbourne faces the sharpest risk if values keep sliding.

With property values sliding in many capitals and speculation about further declines intensifying, where you own — or plan to buy — matters enormously. New modelling from Cotality, released in August 2026, has put widely-discussed downside scenarios into city-specific context, revealing that a 20 per cent price drop would have very different consequences depending on which market you're in.

The findings are directly relevant to buyers still making decisions, homeowners weighing whether to refinance, and investors evaluating entry points. Understanding what a downturn would actually look like in your city is far more useful than a national headline.

Perth, Brisbane and Adelaide: Buffers Are Substantial

Perth emerges as the most insulated of the major capitals. Cotality's modelling found that even a 20 per cent decline from peak dwelling values would return prices only to around April 2025 levels — meaning the extraordinary growth of the past cycle would still be largely intact for most owners.

Gerard Burg, Cotality's head of research, explained the significance: "There's been plenty of discussion about how far housing values could fall, but the same percentage decline doesn't have the same impact everywhere. Markets such as Perth, Brisbane and Adelaide recorded exceptional growth over the past five years, giving them a more significant buffer against declines than cities where values have been comparatively flat."

Burg put Perth's position in particularly sharp relief: "Even if Perth's housing market fell 20 per cent from its peak, the median dwelling value would still be around where it was in April 2025 after recording one of the strongest growth cycles of any capital city."

Brisbane tells a comparable story. Cotality found that a 20 per cent fall from peak would take values back to approximately August 2024 levels. Brisbane entered its current downturn only two months ago, meaning the recent growth cycle still provides meaningful headroom for most owners. Adelaide is in similar shape — the same 20 per cent fall would return values to around April 2024, underscoring how much value the market accumulated during its latest cycle.

For buyers sitting on the sidelines in these cities, waiting for "the bottom" could mean waiting for a correction that still leaves values well above where they were 12 to 18 months ago. For owners looking to refinance, the data suggests loan-to-value ratios remain manageable for most borrowers — meaning a move to a lower rate or accessing equity is still viable.

Melbourne: The Thinnest Margin

Melbourne presents the starkest contrast. Cotality found the city has the smallest buffer of any major capital, after years of comparatively restrained growth. Its peak was $840,000 in November 2025.

Burg was direct: "Melbourne's home values have recorded very little growth over the past five years, meaning a decline beyond 10 per cent would return values to pre-pandemic levels."

That is a significant scenario. A 10 per cent fall from peak — well within the range of current market commentary — would be enough to erase the gains Melbourne homeowners have accumulated since before the pandemic. Owners who purchased between 2021 and 2023 with smaller deposits should be monitoring their equity position carefully, and it is worth having a broker run through your current situation if you have not done so recently.

Sydney occupies a middle ground. The city is already more than 5 per cent below its peak, but Cotality's 20 per cent scenario would take values only to around May 2021 levels — a meaningfully larger buffer than Melbourne, given the scale of Sydney's pandemic-era upswing.

Reading the Auction Market in Real Time

Separate Cotality data offers a timely read on where buyer confidence sits right now. The weighted average clearance rate across Australia's capital cities reached 51.4 per cent in the week ending 9 August 2026, the strongest result in 12 weeks. That was up 2.5 percentage points from 48.9 per cent the week before, even as auction volumes rose — 1,382 auctions were held across the capitals, up 9.9 per cent on the 1,257 recorded the prior week.

Melbourne's clearance rate climbed to 56.8 per cent, its highest since 3 May, while Sydney's jumped 5.9 percentage points to 51.5 per cent. These are not boom figures — clearance rates remain 17.3 percentage points below where they were in the same week of 2025 — but the stabilisation is meaningful. It suggests that at current prices, buyers are re-entering the market in modest numbers.

Brisbane's clearance rate of 35.4 per cent is softer, reflecting the adjustment that follows a period of rapid growth, even as the price-buffer modelling shows values remain well above where they were 12 months ago.

What to Do With This Information

If you own in Perth, Brisbane or Adelaide and have been wondering whether the moment to refinance has passed — it has not, for most borrowers. You can check your options using our refinance savings calculator or explore what a more competitive rate could mean for your repayments with our repayment calculator.

If you are buying in these cities, the buffer modelling provides useful context, not a guarantee. Prices may fall further — but the scale of prior growth means most buyers are not walking into a market where a moderate downturn instantly puts them underwater.

If you own in Melbourne, particularly with a loan originated between 2019 and 2023, it is worth having a broker check your equity position before any further decline puts refinancing options out of reach.

Burg summed up the broader message for all markets: "Understanding where values would return to under different scenarios provides useful context for buyers, sellers and policymakers, particularly given how differently each capital city has performed over recent years."

The Adviser reports on the full Cotality modelling for all capital cities here. For investors looking at current rates and lender options, our investor home loans hub is a good starting point.