Sydney and Melbourne House Prices Slip as Perth Surges

Domain's March quarter data shows house prices dipping in Sydney and Melbourne for the first time in years, as buyer caution and rate pressure bite.

Australia's two largest housing markets have reached a turning point. Domain's March Quarter House Price Report shows house prices edging lower in Sydney and Melbourne — the first quarterly falls in years for both cities — as elevated borrowing costs and a clear shift in buyer behaviour start to weigh on demand in the nation's most expensive postcodes.

Meanwhile, Perth continues to operate in an entirely different market, with quarterly and annual growth that looks extraordinary by east coast standards.

Sydney and Melbourne House Prices Ease

Property Update reports that Sydney house prices dipped 0.04 per cent — or $772 — over the March quarter to a median of $1,791,643, breaking a three-year run of uninterrupted quarterly growth. December 2025 now stands as the price peak for Sydney houses.

Melbourne's correction runs deeper. House prices fell 0.6 per cent ($6,357) over the March quarter to a median of $1,082,728 — the city's first quarterly fall in 18 months and a reversal of gains recorded late last year.

Annual growth remains positive: 6.6 per cent in Sydney and 4.4 per cent in Melbourne. But momentum has clearly slowed. Domain's Chief Residential Economist, Dr Nicola Powell, says the shift is as much about buyer behaviour as affordability maths.

"The declines we're seeing in Sydney and Melbourne is as much about changing sentiment as it is about borrowing limits," Dr Powell told [Property Update](https://propertyupdate.com.au/sydney-and-melbourne-house-prices-stall-as-buyer-sentiment-shifts-new-data-reveals/). "Buyers haven't disappeared, but they're behaving very differently. There's less urgency, more negotiation and a much sharper focus on affordability."

For buyers, a less frantic market can mean better negotiating conditions. If you're a first home buyer who has been priced out of Sydney or Melbourne houses, a [first home buyer home loan](/home-loans/first-home-buyer) comparison and a [borrowing power calculator](/calculators/borrowing-power) are sensible first steps to understand what's genuinely within reach.

Units Hold Up as Buyers Reset Expectations

While houses are struggling, Domain's data shows unit markets in both cities proving more resilient as buyers pivot toward more affordable options.

Sydney unit prices rose 0.6 per cent ($5,151) over the March quarter to a record $848,227. That extends what is now 13 consecutive quarters of uninterrupted unit price growth — the longest such run since the early 2000s. Annual growth strengthened to 3.5 per cent, the fastest pace in 1.5 years.

Melbourne units slipped a more modest 0.4 per cent ($2,674) over the quarter to $611,182, but annual growth actually accelerated to 5.5 per cent — the strongest in more than four years. Units have now outperformed houses in Melbourne for two consecutive quarters.

This divergence between houses and units reflects a structural shift in buyer demand. As Dr Powell puts it: "Houses in the most expensive markets are feeling the interest rate pressure first, while units are holding up better as buyers reset expectations and look for safer, more accessible price points."

If you're weighing up whether a unit or house makes more sense for your budget, a [repayment calculator](/calculators/repayment) is a practical way to compare what different price points cost per month at current interest rates.

Perth, Brisbane, and Adelaide Still Growing Hard

The national housing market is fragmenting in ways that make sweeping generalisations misleading. While Sydney and Melbourne cool, Perth's upswing continues at a pace that looks striking by comparison.

Perth house prices rose 5.7 per cent ($63,615) over the March quarter to a record $1,178,522 — extending the city's uninterrupted growth streak to 14 consecutive quarters, the longest run since the early 2000s. Annual gains stand at 24.6 per cent, the strongest of any capital city. Perth units are also surging: up 6.0 per cent ($39,857) over the quarter to a record $700,351, with annual growth of 27.8 per cent — the highest in Australia and the strongest result since 2006. Units outperformed houses in Perth for the quarter.

Brisbane and Adelaide are firmly in growth territory. Brisbane house prices rose 4.2 per cent ($49,311) over the quarter to $1,212,195, while Adelaide gained 5.2 per cent ($53,922) to $1,099,293. Both cities hit new records in the March quarter.

Domain data also highlights a growing divergence between houses and units nationally, with buyers becoming more cautious, price-sensitive, and selective. Dr Powell notes the market is now "fragmenting rather than moving in a single direction."

What Borrowers Should Take Away

The key message from the Domain data is that the Australian property market is not a single thing — it's a collection of very different local markets responding to the same interest rate environment in very different ways.

If you're sitting on a fixed rate that's expiring soon, or you haven't reviewed your home loan in the last 12 months, now is a good time to understand your options. Use a [refinance savings calculator](/calculators/refinance-savings) to put a number on what switching could be worth. And for those weighing up a purchase, understanding exactly where your borrowing capacity sits before you make decisions is more important than ever in a market this fragmented.