New modelling has revealed that capitals that experienced a recent boom in house prices will retain a sizeable cushion even under severe value declines.
New modelling from Cotality has found that Perth, Brisbane, and Adelaide have built substantial buffers through their recent growth cycles, meaning a 20 per cent fall from peak values would leave each market at comparatively recent price levels, unlike Melbourne, where modest further falls could erase five years of gains.
The property-data and analytics firm modelled 5, 10, 15, and 20 per cent declines from peak dwelling values across the major capitals, examining how differently a deeper downturn would affect markets after the post-pandemic growth period.
Perth retains largest cushion
Perth emerged with the largest growth buffer among the major capitals.
Cotality’s modelling indicated that even a 20 per cent fall in property prices would take dwelling values back only to about April 2025, following what it described as the nation’s strongest recent growth cycle.
Cotality head of research Gerard Burg said the scenarios were designed to put widely discussed downside figures into market-specific context.
“There’s been plenty of discussion about how far housing values could fall, but the same percentage decline doesn’t have the same impact everywhere,” Burg said.
“Markets such as Perth, Brisbane and Adelaide recorded exceptional growth over the past five years, giving them a more significant buffer against declines than cities where values have been comparatively flat.”
Burg added that Perth’s position demonstrated the difference between a percentage correction and the amount of prior growth that would remain intact after it.
“Conversely, even if Perth’s housing market fell 20 per cent from its peak, the median dwelling value would still be around where it was in April 2025 after recording one of the strongest growth cycles of any capital city,” he said.
Cotality further found that Brisbane and Adelaide also retain substantial headroom after their recent expansions.
Although Brisbane entered a downturn only two months ago, a 20 per cent fall would still leave values around their August 2024 level, after one of the country’s strongest growth periods.
In Adelaide, the equivalent decline would return dwelling values to approximately April 2024 levels, underscoring how much value the market accumulated during its latest cycle.
Melbourne’s thin margin
Melbourne presents the sharpest contrast, with Cotality finding that the city had the smallest buffer of any major capital city after years of comparatively restrained growth.
It said that a decline beyond 10 per cent would take dwelling values back to pre-pandemic levels.
The city’s dwelling values peaked at $840,000 in November 2025, according to Cotality.
“Melbourne’s home values have recorded very little growth over the past five years, meaning a decline beyond 10 per cent would return values to pre-pandemic levels,” Burg said.
Sydney, despite being more than 5 per cent below peak, retains a larger historical buffer than Melbourne.
Under Cotality’s 20 per cent downturn scenario, Sydney dwelling values would return to around May 2021 levels, highlighting the scale of gains recorded through the pandemic-era upswing.
Demand pressures reshape outlook
Burg said conditions had weakened as affordability and mortgage serviceability pressures first surfaced in higher-value markets, before higher rates, cost-of-living pressures, softer consumer confidence, and reduced investor activity following the federal budget weighed on demand more broadly.
“Although housing values are falling across more cities, underlying supply and demand conditions remain quite different,” Burg said.
“Markets that experienced the strongest growth over recent years are entering this downturn from a much stronger position. Understanding where values would return to under different scenarios provides useful context for buyers, sellers and policymakers, particularly given how differently each capital city has performed over recent years.”
[Related: RBA flags ‘sharp’ fall in new housing commitments]
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