Australia’s Property Downturn Deepens as Home Values Fall Across Most of the Country

Australia’s property market has entered a more challenging phase, with home values falling across most of the country as higher borrowing costs, weaker buyer confidence and changing market conditions continue to place pressure on prices.

Recent national property data shows Australian home values fell 0.9% during August 2026, marking the fifth consecutive month of decline. Approximately 93% of Australian suburbs recorded falling property values, highlighting how broadly the downturn has spread.

The national median property value was approximately $912,885, according to Cotality data.

While property markets naturally move through cycles, the latest figures suggest buyers and sellers are now operating in a significantly different environment from the highly competitive conditions experienced during previous periods of rapid price growth.

Melbourne Among the Markets Feeling the Pressure

Melbourne home values declined 1.1% during August, while Sydney recorded the largest monthly capital-city fall at 1.4%.

Melbourne values are now approximately 6.5% below their previous peak, while Sydney values are about 7.1% below their February peak.

Brisbane also fell 1% during August, while Canberra declined 1.1%. Darwin was the only capital city to record an increase during the month, rising 0.6%.

Importantly, however, property performance can vary considerably between cities, suburbs and even individual streets.

Some outer metropolitan locations have demonstrated greater resilience than higher-priced inner-city areas, reinforcing why homeowners should avoid relying solely on national headlines when assessing the value of their own property.

What Is Driving the Property Market Downturn?

Several factors are contributing to softer property conditions.

Higher interest rates have reduced borrowing capacity for many buyers, while economic uncertainty has made some purchasers more cautious about committing to major financial decisions.

At the same time, properties are generally taking longer to sell in several markets and buyers are gaining more choice, creating greater competition between sellers.

CommBank economists say the housing adjustment has developed faster and spread more widely than previously expected. The bank currently forecasts Australian dwelling prices could fall around 9% from peak to trough during the current cycle. Melbourne is forecast to experience a peak-to-trough decline of approximately 12%, although forecasts can change as economic conditions develop.

A Changing Market Can Create Opportunities for Buyers

For buyers, softer conditions can provide something that has been difficult to find during highly competitive property markets: time and negotiating power.

With less competition for some properties, prospective buyers may have more opportunity to conduct proper due diligence, compare properties and negotiate before making an offer.

Cotality has also cautioned buyers against trying to perfectly predict the lowest point of the property cycle. For buyers purchasing with a longer-term strategy, attempting to identify the exact bottom of the market can be extremely difficult.

For first-home buyers and families planning to upgrade, the changing market may therefore create opportunities that were unavailable when properties were attracting intense competition.

What Does the Downturn Mean for Sellers?

A falling market does not mean properties stop selling.

It means the strategy becomes more important.

In a more cautious market, unrealistic pricing can result in a property remaining unsold for longer, while correctly positioned properties can continue to attract serious purchasers.

Presentation, pricing, marketing and negotiation all become increasingly important when buyers have more properties to choose from.

Sellers should therefore understand their current local market, rather than basing expectations on what a neighbouring property may have achieved six or twelve months earlier.

The strongest selling strategy in today's environment is built around recent comparable sales, current competing listings, buyer demand and realistic positioning.

The Property Market Is a Cycle — Not a Single National Story

Australia has experienced many property cycles, and conditions will continue to change.

CommBank currently expects the downturn to continue before conditions begin stabilising, with a modest recovery forecast during 2027. However, that outlook partly depends on future interest-rate movements and broader economic conditions.

It is also important to remember that the Australian property market is not one single market.

Melbourne, Sydney, Brisbane, Perth and Adelaide can perform differently — and within Melbourne itself, individual suburbs and property types can experience very different levels of demand.

For buyers and sellers, understanding those local conditions can be far more valuable than reacting to a national headline.

RAVS REALTORS Market Perspective

Changing markets require informed decisions.

For sellers, understanding the property's realistic current value and developing the right marketing and negotiation strategy can make a significant difference.

For buyers, reduced competition may provide opportunities to negotiate and secure the right property without the pressure experienced during stronger market conditions.

Whether the market is rising, falling or stabilising, property decisions should be based on individual circumstances, local market evidence and a clear strategy.

Thinking about buying or selling property in Melbourne?

Speak with RAVS REALTORS for a confidential discussion about your property, current market conditions and the options available to you.

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