Australia’s housing market has continued to rise into early 2026, with most capital cities reaching new highs over the March quarter. However, the pace of gains has slowed sharply since late last year, with growth easing across most markets and quarterly gains roughly halving from the previous quarter as borrowing constraints take hold.
The cracks in this market aren’t broad-based declines – they’re a clear loss of momentum.
This reflects a shift in borrowing capacity rather than a weakening in demand. Declining sentiment and renewed cost-of-living pressures are also weighing on buyer behaviour. Higher interest rates and the serviceability buffer are materially reducing borrowing capacity, limiting how far buyers can stretch. Demand hasn’t disappeared, but it has changed. Buyers are more cautious, more price-sensitive, and increasingly selective about where and what they purchase.
The impact is increasingly uneven across the country. Sydney and Melbourne are showing the clearest signs of strain, with price growth stalling or reversing as affordability pressures bite. Sydney houses, and Melbourne and Canberra units were among the only segments to decline over the quarter. In contrast, Brisbane, Adelaide and Perth continue to record strong gains and new highs, although momentum has eased from recent peaks – apart from Adelaide houses accelerating. Smaller markets such as Hobart and Darwin are also strengthening, reflecting a continued shift in market leadership toward more affordable regions. This shift is also evident in market activity, with auction clearance rates easing to their lowest levels since late 2024 and supply lifting across most cities, signalling more cautious buyer behaviour as economic conditions weigh on decision-making.
This shift is also reshaping demand across property types. Units are outperforming in Sydney, Melbourne, Brisbane and Perth as buyers adjust to more accessible price points, while houses continue to lead in markets where affordability constraints are less binding. Across both segments, growth is becoming more measured, reinforcing that borrowing limits are now capping how far and how fast prices can rise.
The result is a housing market that is no longer moving in sync. Growth is becoming more fragmented, shaped by borrowing capacity, affordability and local conditions. While underlying demand remains supported by population growth, limited supply and a resilient labour market, the current environment is defined by more cautious, selective buyers and increasingly uneven price outcomes across the country.
-Source Domain.com.au
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