Australian House Prices Fall Across All Capital Cities for First Time in 15 Years

Australian house prices have fallen across every capital city for the first time in 15 years, according to new data from property platform Domain. Prices declined 4.7% in the September quarter, marking the steepest quarterly fall on record and signalling a broader slowdown across the country’s property markets.

Perth recorded the sharpest decline, with house prices falling 7.4% over the quarter. Sydney and Melbourne also experienced significant drops of 4.7% and 3.3%, respectively, marking their largest quarterly declines in four years. Combined capital city house prices fell to $1,226,566.

Rising Interest Rates Weigh on Housing Demand

The downturn reflects mounting pressure from higher borrowing costs, reduced affordability and cost-of-living challenges. Property experts say these factors have weakened buyer demand and reduced confidence across major markets.
According to Domain chief residential economist Nicola Powell, the slowdown has spread beyond the cities that initially experienced price weakness. Homes are taking longer to sell, buyers have more room to negotiate, and sellers are facing greater pressure to adjust their price expectations.
Data firm Cotality also reported that unit prices declined 3.5%, marking the second consecutive quarter of falls for both houses and units.
Expensive Homes Face Greater Price Pressure
Australia’s higher-value properties have experienced larger declines than lower-priced homes, according to Cotality data. In Sydney, prices in the most expensive quartile fell more than twice as much as those in the least expensive quartile.
Property economist Cameron Kusher attributed the trend to fewer buyers and higher borrowing costs, which have particularly affected expensive properties following substantial price growth in recent years.
Lower-value homes have remained comparatively stable in several markets, while prices in Darwin’s lowest-value segment continued to grow. Experts suggest these properties remain accessible to a wider pool of buyers as affordability pressures intensify.
Buyer Confidence Weakens Across Major Markets
The downturn had already begun before changes to investment taxes announced in the federal budget in May. Experts pointed to three consecutive interest rate increases, stretched household budgets and reduced borrowing capacity as important factors behind the weakening market.
Auction activity has also slowed considerably. Cotality recorded 1,423 capital city auctions in the previous week, roughly half the level seen a year earlier.
Lower confidence is also affecting first-home buyers, some of whom may delay purchases in anticipation of further price declines. Kusher suggested the downturn could continue longer than expected, particularly until interest rate cuts appear more likely.
What Investors Should Watch Next
Investors and prospective buyers should monitor interest rate expectations, affordability and buyer demand to assess whether the housing downturn will deepen or begin to stabilise.
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