Property Price Falls Won't Hit All Capital Cities Equally

New Cotality modelling shows Perth, Brisbane and Adelaide have large buffers from recent gains, while Melbourne faces the narrowest margin of any capital city.

Not all property markets are equal when values fall — and new research from Cotality makes that point with striking clarity. MPA Australia reports that the property data and analytics firm's August Housing Chart Pack models what would happen to median dwelling values in each major Australian capital city under declines of 5, 10, 15 and 20 per cent from peak values. The results put widely discussed downside numbers into a context that matters for buyers, existing owners, and anyone reassessing their position in a cooling market.

Cotality head of research Gerard Burg said the analysis was designed to answer a question that often gets lost in national-level commentary. "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," Burg said. "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."

Perth Has the Deepest Buffer of Any Capital

Perth stands out as the market most insulated from a correction, having recorded the strongest growth cycle of any major capital city in recent years. Cotality's modelling found that even a 20 per cent decline from Perth's peak dwelling values would take prices back only to around April 2025 — still within the upper range of its extraordinary recent run.

That kind of buffer is worth understanding in practical terms. A buyer purchasing at today's softened Perth prices is buying into a market that would need to fall substantially further before their equity position became a concern. Burg underscored the difference between a percentage fall and the prior growth it would erase. "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," he said.

Brisbane and Adelaide: Significant Headroom Remains

Brisbane and Adelaide also carry meaningful buffers, having both recorded exceptional growth during their recent cycles before entering modest downturns over the past two months.

Cotality's modelling found that a 20 per cent fall in Brisbane would still leave dwelling values at approximately August 2024 levels. In Adelaide, the equivalent 20 per cent scenario would return values to approximately April 2024. For property investors assessing these markets, the key question is not just how far prices might fall but from where they would be falling — and the answer in Brisbane and Adelaide is from a position of significant accumulated gains.

Use the borrowing power calculator to run scenarios based on different price levels if you are weighing an entry or exit in either of these markets, and compare current offers across investor home loan options to ensure your holding cost is as low as possible.

Melbourne: The Narrowest Margin of Any Capital

Melbourne presents the sharpest contrast. Cotality found that the city has the smallest buffer of any major capital city, following years of comparatively restrained growth. Dwelling values peaked in Melbourne at $840,000 in November 2025, and the modelling indicates that a decline beyond 10 per cent would take values back to pre-pandemic levels.

Burg was direct about what that means. "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," he said.

For Melbourne property owners — particularly those who purchased in the last two to three years — the practical implication is that their equity cushion may be thinner than they assume. Reviewing your current interest rate against what is available through refinance home loan options is one practical way to reduce holding costs and improve your overall financial position.

Sydney: Historical Cushion Despite Recent Softness

Sydney's position is notable given that the city is already more than 5 per cent below its peak. Despite that decline, Cotality's modelling indicates that Sydney retains a larger historical buffer than Melbourne. Under a 20 per cent scenario, Sydney dwelling values would return to around May 2021 levels — still capturing much of the pandemic-era upswing rather than erasing it entirely.

What Drives the Market From Here

Burg said the current deterioration in buyer demand reflects a combination of forces that have been building for some time: affordability pressures, mortgage serviceability constraints, higher interest rates, cost-of-living pressures, weaker consumer confidence, and reduced investor activity following the federal budget.

"Although housing values are falling across more cities, underlying supply and demand conditions remain quite different," Burg said. "Markets that experienced the strongest growth over recent years are entering this downturn from a much stronger position. 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."

For buyers, that insight shifts the question from whether now is a good time to buy to where. A 20 per cent correction in Perth still leaves values at April 2025 levels; the same correction in Melbourne would take the market below where it was before the pandemic. Before committing, stress-test your repayments using the repayment calculator and check cheapest home loan options to ensure that whatever you borrow, you are paying as little as possible to hold it.