Overview
While property ownership remains a distant dream or outright alien concept for many Australians, new data has revealed that during the cost-of-living crisis, the country's two biggest housing markets have seen a slight downturn in activity. As reported by the Australian Financial Review, the Cotality daily index has revealed that home values in Sydney and Melbourne are shrinking.
Since February, home values have slowly been depreciating in Australia's two biggest cities, reaching a drop of 0.04 percent on the weekend. Sadly, it's not indicative of a nationwide shift, since value is increasing in Perth, Adelaide and Brisbane.
Historically speaking, downturns were last recorded in times of major financial upheaval, with the recent occurrences including 2008, 2011 2018, 2019 and 2020. However, it's not a symptom of a bubble bursting, rather a loss of momentum in a market that's been growing for the last six years — a loss brought on by rising interest rates and economic shockwaves from the Iran War.
Cotality research director Tim Lawless said to AFR, "We've seen more than three months of housing values moving backwards…If you go back historically, there's probably only around five times in the last 15 years where we've seen clearance rates holding this low and they all line up with housing market downturns."
Ray White chief economist Nerida Conisbee reiterated to AFR that this qualifies as a mild downturn, and is heavily offset by the continuing growth nationwide. "In contrast, other parts of the country are continuing to record strong growth, particularly Brisbane, Adelaide and Perth. This highlights how uneven the current cycle is, with the larger East Coast capitals no longer leading the market in the way they have historically."
According to Cotality, this week's preliminary clearance rate (the ratio of properties sold at auction to total auctions listed) fell for the third consecutive week, bringing it below the average March figure by nearly ten percent, with more drops forecasted around the ANZAC Day long weekend.
Meanwhile in the renting world — Cotality's Q1 Rental Review of 2026 reveals that in Sydney, renters are spending a record 33.1 percent of household median income on rent, while the shortage of rental listings has increased to 18% below the five-year average across the country.