Key takeaways
Affordability is changing what Australians buy. More buyers are considering townhouses and apartments rather than simply moving further from the CBD.
Detached houses remain the least affordable option. Large gaps persist between buyer budgets and house listing prices across many capital cities.
Townhouses are becoming the affordability middle ground. They can offer more space than apartments without the higher price of detached houses.
Units are Australia’s most buyer-aligned housing segment. Buyer search budgets are matching or exceeding listing prices across many apartment markets.
Quality medium-density housing could benefit from this structural shift. Well-located townhouses and apartments with strong owner-occupier appeal should remain in demand.
For generations, Australians have responded to housing affordability pressures in a predictable way - when the home they wanted became too expensive, they moved further from the city.
But something important is changing. Australia’s affordability problem has become so entrenched that many buyers are making a different compromise.
Rather than simply changing where they live, they are changing what they buy.
This is one of the key findings from Domain’s latest Matching Demand report, which compares millions of buyer search prices with property listing prices across capital cities and dwelling types.
The research found affordability is increasingly shaping housing choice as well as location.
Houses remain the great Australian aspiration
Australians still have a strong preference for detached houses, particularly families wanting more space, privacy and a backyard.
The problem is that aspiration and affordability are moving further apart.
Domain found detached houses remain the dwelling type most disconnected from buyer budgets, with significant gaps between search prices and listing prices across many markets.
Table 1. The price difference between listing and buyer searches, houses.
| City | Inner (0-10km from CBD) | Middle (10-20km from CBD ) | Outer (30km+ from CBD) | ||||||
| Searched | Listing | Gap | Searched | Listing | Gap | Searched | Listing | Gap | |
| Sydney | $2.5m | $2.9m | -$400k | $1.7m | $1.8m | -$100k | $1.1m | $1.28m | -$177k |
| Melbourne | $1.1m | $1.54m | -$440k | $900k | $800k | $100k | $800k | $756k | $44k |
| Brisbane | $1.3m | $1.65m | -$350k | $1m | $1.2m | -$200k | $850k | $944k | -$94k |
| Adelaide | $950k | $1.16m | -$205k | $900k | $900k | $0 | $750k | $764k | -$14k |
| Perth | $950k | $1.14m | -$190k | $850k | $891k | -$41k | $800k | $799k | $1k |
| Canberra | $1.2m | $1.74m | -$538k | $1m | $1.07m | -$71k | $950k | $900k | $50k |
| Hobart | $800k | $835k | -$35k | $700k | $709k | -$9k | $750k | $767k | -$17k |
| Darwin | $750k | $1.0m | -$250k | $750k | $780k | -$30k | $750k | $875k | -$125k |
| Gap and annual change figures may not sum precisely due to rounding.
A positive price gap shows that the buyer search price is above the listing price, while a negative price gap indicates that the buyer search price is below the listing price. |
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In the inner suburbs, Canberra listings were around $538,000 above buyer search prices, followed by Melbourne at $440,000, Sydney at $400,000 and Brisbane at $350,000. Even in Sydney’s outer suburbs, listings remained around $177,000 above buyer budgets.
As Domain Chief Residential Economist Dr Nicola Powell explained:
“The housing market has cooled, but affordability hasn't improved enough to bring detached housing back within reach for many Australians.”
A softer market doesn’t necessarily mean an affordable market. Buyers still face high property prices, borrowing constraints and the challenge of accumulating a sufficient deposit.
Dr Powell added:
“Historically, a market slowdown helps improve affordability, but that relief simply has yet to materialise for house buyers.”
Buyers are changing their compromise
Traditionally, affordability pushed buyers further from the CBD. That continues, but Domain's research suggests dwelling type is becoming just as important.
Townhouses and apartments are generally much more closely aligned with buyer budgets than detached houses. In fact, the affordability difference between dwelling types is now greater than the difference between many inner and outer locations.
Dr Powell explains:
“Today, many are making a different trade-off, changing the type of home they buy rather than where they buy.”
It makes sense. A detached house 40 or 50 kilometres from the CBD may be cheaper, but buyers also need to consider commuting times, transport, employment, schools and lifestyle.
For some households, a well-located townhouse or apartment offers a more attractive compromise.
Townhouses are becoming the middle ground
Townhouses could become one of the major beneficiaries of this affordability shift because they sit between houses and apartments, offering more space than a unit without the price premium usually attached to detached housing.
Table 2. The price difference between listing and buyer searches, townhouses.
- Also read:Sydney housing market update | September 2026
- Also read:The Housing Number That Makes No Sense Right Now | Property Insiders
- Also read:Melbourne housing market update | September 2026
- Also read:This week’s Australian Property Market Update – Latest Data, State by State September 15th 2026
- Also read:Australian housing market update | September 2026
| City | Inner (0-10km from CBD) | Middle (10-20km from CBD) | Outer (30km+ from CBD) | ||||||
| Searched | Listing | Gap | Searched | Listing | Gap | Searched | Listing | Gap | |
| Sydney | $1.90m | $1.80m | $100k | $1.30m | $1.36m | -$55k | $900k | $1.05m | -$145k |
| Melbourne | $950k | $1.10m | -$150k | $800k | $850k | -$50k | $700k | $660k | $40k |
| Brisbane | $1.00m | $1.05m | -$45k | $850k | $780k | $70k | $750k | $719k | $31k |
| Adelaide | $850k | $820k | $30k | $800k | $760k | $40k | $700k | $650k | $50k |
| Perth | $850k | $925k | -$75k | $800k | $898k | -$98k | $750k | $700k | $51k |
| Canberra | $900k | $1.3m | -$400k | $850k | $740k | $110k | $800k | $680k | $120K |
| Hobart | $700k | $790k | -$90k | $650k | $788k | -$138k | $650k | $709k | -$59k |
| Gap and annual change figures may not sum precisely due to rounding. Darwin removed due to low sample size
A positive price gap shows that the buyer search price is above the listing price, while a negative price gap indicates that the buyer search price is below the listing price. |
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Sydney's inner-ring townhouse market provides an interesting example. It shifted from a $200,000 seller premium in 2025 to a $100,000 buyer premium in 2026, while its middle-ring affordability gap also narrowed substantially.
I expect townhouses to play an increasingly important role in our capital cities, but investors shouldn't assume every townhouse will make a good investment.
Location, scarcity, land component, design and owner-occupier appeal will remain critical.
Tip: A quality townhouse in a tightly held established suburb is very different from a generic property in the outer suburbs surrounded by dozens of similar dwellings.
Apartments are increasingly matching buyer budgets
Units have become Australia's most buyer-aligned housing segment, with buyer search prices matching or exceeding listing prices across many markets.
Table 3. The price difference between listing and buyer searches, units.
| City | Inner (0-10km from CBD) | Middle (10-20km from CBD) | Outer (30+km from CBD) | ||||||
| Searched | Listing | Gap | Searched | Listing | Gap | Searched | Listing | Gap | |
| Sydney | $950k | $1m | -$50k | $800k | $765k | $35k | $700k | $671k | $29k |
| Melbourne | $600k | $603k | -$3k | $600k | $600k | $0k | $560k | $601k | -$41k |
| Brisbane | $800k | $800k | $0 | $750k | $700k | $50k | $750k | $750k | $0 |
| Adelaide | $650k | $600k | $50k | $650k | $599k | $51k | $600k | $539k | $61k |
| Perth | $700k | $694k | $51k | $650k | $629k | $21k | $600k | $570k | $30k |
| Canberra | $650k | $620k | $30k | $600k | $480k | $120k | $600k | $498k | $111k |
| Hobart | $700k | $572k | $128k | $700k | $534k | $166k | $650k | $551k | $99k |
| Darwin | $550k | $510k | $40k | $500k | $425k | $75k | $500k | $428k | $72k |
| Gap and annual change figures may not sum precisely due to rounding.
A positive price gap shows that the buyer search price is above the listing price, while a negative price gap indicates that the buyer search price is below the listing price. |
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However, Domain cautions that this doesn't necessarily mean apartments are undervalued. Higher search budgets may reflect buyers looking for larger, better-quality or better-located apartments than the stock currently available.
This is an important distinction for investors because the lesson isn't simply to buy just any apartment because affordability is driving demand towards them.
Quality assets in desirable locations with scarcity and strong owner-occupier appeal are likely to benefit most from this structural shift.
Our cities will need to adapt
This changing buyer behaviour has implications beyond the property market. As Dr Powell puts it:
“The biggest divide in Australia's housing market is no longer simply between inner and outer suburbs. It's increasingly between detached houses and medium-density housing.”
In my mind, this presents an opportunity for our established suburbs. Many already have transport, schools, shopping, employment and lifestyle infrastructure.
This is means sensible medium-density development could provide more housing choices without forcing every new household further towards the urban fringe.
But we need the right housing. Buyers still want natural light, privacy, storage, usable outdoor areas and neighbourhoods where they genuinely want to live.
The bottom line
Domain's research points to an important structural change happening in Australia's housing markets.
Sure, moving further from the CBD remains one path to affordability, but increasingly buyers are also changing the type of property they purchase. The housing stock most closely aligned with contemporary buyer budgets is increasingly concentrated in medium-density housing.
Of course, Australians haven't stopped wanting houses. Affordability is simply forcing more people to reconsider which elements of the traditional housing dream matter most.
For property investors, that means paying close attention to changing buyer preferences. Well-located, high-quality townhouses and apartments in established suburbs could benefit from this shift, particularly where they provide the space, amenity and lifestyle owner-occupiers increasingly want.
And that is where I believe some of the most interesting opportunities will emerge as our cities continue to evolve.
