Key takeaways
National home values rose 0.8% in February, but a significant divergence has emerged as Sydney and Melbourne flatlined (0.0%) while Perth (+2.3%) and Brisbane (+1.6%) continue to surge.
Affordability is the primary market driver, with the lower quartile segment growing by 4.2% over the last quarter compared to a 0.2% decline in the premium upper quartile.
Inventory remains critically low in mid-sized capitals, with Perth listings 47% below average, whereas Sydney and Melbourne have seen a surge in new listings tracking roughly 10% above average.
Australian housing values continued to rise in February, but the market is showing a clear and widening divergence.
While the national headline recorded a 0.8% increase, this figure masks contrasting trends between the cooling major capitals and the surging mid-sized cities.
Sydney and Melbourne have largely flatlined, whereas Perth, Brisbane, and Adelaide continue to see robust value growth driven by persistent supply shortages.
Leading Cities and Market Divergence
Perth remains the nation’s standout performer, adding more than $22,000 to its median dwelling value in February alone.
In contrast, higher interest rates and stretched affordability have caused a sharp slowdown in the two largest markets:
| Capital City | Monthly Value Change (February) | Quarterly Change | Market Condition |
|---|---|---|---|
| Perth | 2.3% | 6.1% | Extreme growth; median up ~$22.5k |
| Brisbane | 1.6% | 5.2% | Strong momentum; median up ~$17.1k |
| Adelaide | 1.3% | 4.2% | Steady growth; low stock levels |
| Sydney | 0.0% | -0.1% | Flatlined; growth pace easing |
| Melbourne | 0.0% | -0.4% | Flatlined; slightly lower quarterly trend |
Source: Cotality, March 2026
The Affordability Pivot: Lower vs. Upper Quartile
Note: A dominant theme across all major cities is the outperformance of the lower-priced segment.
As borrowing capacity diminishes, demand is concentrating at the entry-level of the market, where first-home buyers and investors remain active.
- Also read:Melbourne housing market update | March 2026
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In Sydney, for example, the lower quartile of house values rose by 2.5% over the past three months, while the upper quartile fell by 2%:
| Market Segment (National) | 3-Month Value Change |
|---|---|
| Lower Quartile (Affordable) | +4.2% |
| Upper Quartile (Premium) | -0.2% |
Source: Cotality, March 2026
Supply Dynamics and New Listings
Inventory levels continue to dictate price pressure.
While Perth, Brisbane, and Adelaide are grappling with listings 22% to 47% below their 5-year averages, Sydney and Melbourne are starting to see a recovery in supply.
New listings in February were 8% to 12% above average in these cities, providing buyers with more choice and reducing upwards price pressure.
Outlook for 2026: Headwinds and Stabilizers
The Australian housing market enters the autumn season finely balanced.
Note: While affordability and high interest rates act as natural ceilings for price growth, several factors are preventing a broad-based downturn.
Key Factors Influencing the Market:
- Stretched Serviceability: The February rate hike has further eroded borrowing power, particularly impacting the premium segments of Sydney and Melbourne.
- Labor Market Resilience: Historically low unemployment remains a major stabilizer, preventing forced selling and supporting mortgage serviceability.
- Policy Support: Government schemes, such as the 5% deposit guarantee, continue to channel demand into more affordable market segments.
Overall, housing values are expected to remain on a modest upward trajectory through 2026, though growth will likely be increasingly uneven and concentrated in more affordable price points.
