The mid-sized capitals could absorb a 20 per cent fall in home values while retaining much of their recent gains, while Melbourne faces the greater downside risk as conditions weaken.
New data has shown that the mid-sized capitals would have a reasonable buffer from home value declines in the current market downturn following significant growth in the last five years.
Cotality’s August Housing Chart Pack, which modelled various price declines from peak dwelling values, showed that Perth, Brisbane, and Adelaide would retain much of the value gained during their recent booms.
Cotality’s head of research, Gerard Burg, said the analysis showed the implications of a range of scenarios, including decreases of 5, 10, 15, and 20 per cent.
“The main thing is those contrasts between the mid-tiers and the major capitals,” he told REB.
‘While a sizeable decline in the mid-tiers takes you back just a couple of years, a similar percentage decrease in Melbourne returns to pre-pandemic levels. So it really speaks to the difference between these markets.”
The data showed that Brisbane, which entered a downturn a couple of months ago, could absorb a 20 per cent correction from its peak in May this year, but values would still be around August 2024 levels.
In Adelaide, a 20 per cent decline would only return the housing market to around April 2024, highlighting its recent value growth.
Meanwhile, the findings showed Perth had the largest buffer of the capitals, with a 20 per cent fall returning dwelling values to around April 2025, following recent strong growth.
Recently, Brisbane and Adelaide recorded drops of 0.6 per cent and 0.2 per cent respectively in July, marking their second consecutive month of declines, while Perth recorded a modest 0.1 per cent.
Burg said the “remarkable growth” in the mid-tier capitals had led to home owners’ equity rising considerably, providing protection against downturn declines.
“It’s going to be a different story depending on how long people have held the property – people who bought in these cities pre-pandemic really are in the strongest positions.”
“Those who have bought close to the peak obviously would face a much more challenging environment.”
Burg said it was telling that even the worst-case scenario modelling of a 20 per cent decline would only set Perth back to April 2025.
“It just speaks to how much has been accumulated and really is a stark contrast to what we see in a city like Melbourne, for example.”
Major capitals
Sydney, which has already seen values drop 5 per cent below their peak, would see a 20 per cent downturn take values back to only May 2021, highlighting the scale of the city’s pandemic.
Melbourne had the smallest buffer of any major capital city, with modelling of declines beyond 10 per cent returning dwelling values to 2017 levels, after five years of subdued growth.
Burg said Melbourne, which peaked at $840,000 in November 2025, hadn’t seen the same accumulated value as other major capitals over the past five years, primarily because of migration and an influx of supply.
“There was the migration of people out of Melbourne into regional areas and into areas like South-East Queensland during the worst parts of the pandemic.”
Burg also said there was a significant amount of supply added to the market between the start of 2020 and the end of 2025, with around one third of national housing construction completed in Victoria.
“So that really provided a constraint on the upside to how far values could rise over that period.”
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