Some of Sydney’s most exclusive areas have lost as much as $450,000 in median house value. Melbourne and Canberra are showing the clearest signs of weakness, while Perth, Brisbane and Adelaide remain profitable for most sellers
Australia’s long-running property boom is beginning to show its first serious cracks.
According to Domain’s latest Profit and Loss report, the share of home resales delivering a profit has slipped for both houses and units, suggesting the era of easy property gains may be nearing its peak.
Nationally, 97.4 per cent of house resales still generated a profit, while unit profitability remained unchanged at 88.6 per cent.
The market is therefore not in freefall. However, in some of the country’s most expensive suburbs, the fall in value has already become severe.
Sydney suburbs lose up to $450,000
The largest declines were recorded in Sydney’s eastern suburbs.
Bondi, Vaucluse and Bellevue Hill suffered some of the biggest falls in Australia, with median house values dropping by as much as $450,000.
The downturn has also spread across the city. Baulkham Hills, Cronulla, Miranda, Caringbah and Manly recorded declines ranging from $295,000 to $390,000.
Sydney remains Australia’s most profitable market in absolute terms, with a median resale gain of $739,500.
That figure highlights the market’s divide. Owners who bought many years ago may still be sitting on substantial profits, while those who purchased close to the peak risk selling for far less than they paid.
Melbourne and Canberra under pressure
Melbourne is also showing significant weakness.
Price declines have affected prestigious suburbs including Toorak and South Yarra, beachside areas such as Brighton and Sandringham, and family-focused eastern suburbs including Glen Waverley and Doncaster.
The unit market is particularly vulnerable. More than one in four Melbourne unit sellers are now selling at a loss.
Canberra is following a similar pattern, with softer conditions than the cities that led the property surge in recent years.
Domain chief residential economist Dr Nicola Powell said the change was modest but significant because resale profitability usually follows broader market movements with a delay.
Adelaide no longer immune
Adelaide, which had enjoyed years of strong growth, is also recording declines.
The largest falls have been concentrated in affluent inner-southern suburbs such as Mitcham and Unley, as well as popular lifestyle locations including Glenelg, Brighton, the Adelaide Hills and McLaren Vale.
The downturn is therefore no longer limited to Sydney and Melbourne.
AMP chief economist Shane Oliver said revised data showed prices had also started falling in Brisbane, Adelaide and Perth from June.
Perth and Brisbane remain highly profitable
Perth and Brisbane continue to lead the country for profitable house resales.
In Perth, 99.6 per cent of transactions delivered a gain, while Brisbane recorded 99.5 per cent.
Median resale profits reached record levels of $610,000 in Perth and $629,056 in Brisbane.
Paradoxically, Perth also recorded the nation’s largest median loss among the small number of loss-making sales, at $213,500. Brisbane followed with a median loss of $180,000.
Less than 0.5 per cent of house transactions in both cities were sold at a loss.
This means most sellers are still making money, but those forced to sell at the wrong point in the cycle can suffer substantial losses.
National prices moving lower
According to Oliver, national home prices have already fallen 2 per cent from their peak.
Sydney and Melbourne are down by about 5.5 per cent.
He expects a total decline of around 7 per cent nationally from peak to trough.
Brisbane, Adelaide, Sydney and Hobart are considered the most overvalued and vulnerable house markets. In the unit sector, Brisbane, Adelaide and Canberra face the greatest risk.
Oliver said predictions of a dramatic 15 to 20 per cent crash were probably exaggerated.
A fall of that size would require widespread forced selling, which is unlikely without a sharp increase in unemployment.
Interest rates, tax changes and weak confidence
Several pressures are weighing on the market at the same time.
High interest rates continue to reduce household borrowing capacity. Changes to property investment taxes have created uncertainty, while buyer confidence remains low.
Many purchasers believe prices have further to fall and are choosing to wait.
Sellers, however, are often still asking for prices based on the boom years.
The result is a slower market, fewer transactions and a growing gap between what owners expect and what buyers are willing to pay.
Brisbane auction market stalls
Queensland buyers’ agent Glenn Price said Brisbane was now in a difficult position.
The city’s auction clearance rate has remained below 40 per cent for ten consecutive weeks.
For a market that appeared unstoppable only recently, it is a dramatic reversal.
Price said buyers are waiting for bargains while sellers continue to price properties as if conditions were still those of 2022.
The result is a market that is beginning to grind to a halt.
The RBA watches the slowdown
Australia’s four major banks now expect the cash rate to remain on hold at 4.35 per cent.
Price said it was difficult to imagine the Reserve Bank increasing rates again while the property market was already losing momentum.
The RBA is due to announce its next interest-rate decision on August 11.
Oliver expects rate cuts to begin in the second half of 2027. A sharper fall in home prices could bring that timetable forward.
Falling property values reduce household wealth, which can weaken consumer spending and help bring inflation back towards the Reserve Bank’s target more quickly.
Not a crash, but the cycle has changed
Australia’s property market remains profitable for most homeowners.
However, the direction is becoming clear: the period in which almost every purchase produced an automatic gain is ending.
The most expensive suburbs can also be the most exposed when the market turns, because even a modest percentage decline can wipe hundreds of thousands of dollars from a property’s value.
The greatest risk is for those who must sell now — families under financial pressure, highly leveraged investors or owners who bought near the peak.
The boom has not yet become a crash.
But for the first time in years, Australian property no longer looks like a guaranteed path to profit.
Meta description: House prices are falling across several Australian suburbs, with losses of up to $450,000 in Sydney. Melbourne and Canberra are among the weakest markets.
