Housing market splits as Perth surges and largest capitals retreat

Perth’s unbridled property boom continues to defy a world of economic uncertainties and a gradual increase in local real estate listings to outshine the rest of the country.

The Sydney and Melbourne markets on the other hand have moved more firmly into correction territory, both declining by 0.6 per cent in the same month that the Western Australian capital chalked up a huge 2.1 per cent gain.

Brisbane, Adelaide and Darwin also saw growth slow, but from a high base, with values still rising by more than 1 per cent month-on-month in each city. Nationally, the median dwelling value gain was 0.3 per cent.

Property in Perth added more than $21,000 to the median dwelling value in April and has now broken clear from the other mid-sized capitals that had previously been powering the national market in unison.

Active listings rising to 4,185 at the end of the month, according to REIWA data released Thursday (1 May). This was 28.9 per cent higher than March, but still 10.2 per cent lower than at the same time last year.

Brisbane (1.2 per cent) and Adelaide (1.1 per cent) are still on track, based on those April growth rates, to comfortably attain double-digit growth rates but each has seen its capital growth pace slow appreciably in recent months.

While Sydney and Melbourne, the two largest property markets in the country, each went backwards at the same rate in the past month, their respective real estate landscapes could scarcely be more different.

Melbourne has descended from being the second most expensive city in March 2020 to now being pricier than only Darwin and Hobart. The latter’s annual growth rate is more than four times that of the Victorian capital, so it is not beyond the realms of possibility the Tasmanian city could eventually eclipse its nearest northern neighbour.

Sydney, by contrast, has seen prices fall only after a meteoric rise over the past few years that has driven its market to a point of unaffordability that is at last putting the shackles on further price expansion.

Allen Habbouchi, Principal Licensee, aussieproperty.com, told API Magazine that the divergence between upper and lower quartile performance in Sydney largely reflects differences in borrowing capacity and buyer demand.

“More affordable segments of the market continue to benefit from stronger demand, particularly from first home buyers and those more sensitive to value, while higher-end markets are being more directly impacted by elevated interest rates and tighter credit conditions.

“Additionally, premium markets tend to be more discretionary and can see demand ease more quickly during periods of uncertainty, which is contributing to the softer conditions across the upper quartile,” he said.

“Despite the modest monthly decline, underlying demand in Sydney remains relatively resilient, supported by population growth and constrained housing supply, which is helping to underpin values in the more affordable segments.”

Tim Lawless, Research Director, Cotality, said growth is increasingly concentrated in lower-priced segments, a trend that is becoming more evident and more widespread geographically.

“Every capital city is recording stronger growth in the lower quartile, as demand concentrates where credit availability and first home buyer incentives have the greatest influence.

“The largest difference between upper and lower quartile value growth is in Sydney, where lower-tier house values are up 2.9 per cent year-to-date compared with a 3.3 per cent fall across the most expensive quarter of the market,” Mr Lawless said on Thursday.

Listings on the rise

Even red-hot Perth is showing nascent signs of cooling a little.

REIWA President Suzanne Brown said the increase in Perth listings was a positive sign but cautioned it was too soon to determine if the market had peaked.

“We’ve recorded over 1,000 new listings per week most weeks since mid-March, which is very positive, however, we usually see this from mid-February,” she said.

“The increase in new listings has given buyers more choice and our members report they are taking more time to make a decision, which is reflected in the slight increase in the median selling times for houses and units.

“Sales activity also eased in April, with members reporting lower attendance at home opens and fewer offers, and this has contributed to the increase in active listings.

“I will note that fewer offers is relative, with many agents still receiving multiple offers for appealing properties, just not quite as many as they might have done a few months ago.”

Domain’s Chief Residential Economist, Dr Nicola Powell, drew a distinction between the highest and lowest growth markets.

“The declines we’re seeing in Sydney and Melbourne are as much about changing sentiment as it is about borrowing limits,” she said.

“Buyers haven’t disappeared, but they’re behaving very differently. There’s less urgency, more negotiation and a much sharper focus on affordability.

“In contrast, Perth remains a standout; prices continue to rise strongly due to extremely low supply, above-average population growth and affordability constraints being far less binding than in Sydney and Melbourne.”

Rental market a pressure cooker

Rental conditions remain firmly constrained, with no clear signs of easing.

The national vacancy rate held at 1.6 per cent in April, with units slightly tighter at 1.5 per cent and houses at 1.7 per cent.

All capital cities are sitting at 1.8 per cent or below, well under the long-term national benchmark of 2.5 per cent, and a marked shift from the pre-2020 decade when vacancies averaged closer to 3.3 per cent.

With supply still limited, rental growth continues to push higher. Rents rose another 0.6 per cent over April, taking annual growth to 5.7 per cent, the fastest pace since late 2024. It equates to roughly $38 more per week at the national median.

Sydney remains the costliest market, with median house rents at $869 per week, up $49.50 annually, while unit rents sit at $775, rising $40.70 over the same period.

Darwin is leading rental growth, with house rents up 8.8 per cent and units climbing 9.8 per cent year-on-year. At the other end of the spectrum, Canberra, Adelaide and Melbourne have recorded more moderate increases, with annual growth for both houses and units staying below 5 per cent.

Antonia Mercorella, CEO, Real Estate Institute of Queensland (REIQ), said living alone is fast becoming a luxury few can afford.

More Queensland tenants are banding together in co-tenancy arrangements as rental pressures persist across the state, she said.

The statewide vacancy rate dipped slightly to 0.9 per cent in the March quarter 2026, down from 1.0 per cent in the previous three quarters, according to the latest REIQ Residential Vacancy Rate Report.

“We are seeing a clear shift in rental behaviour, with more tenants forming co-tenancies - joining forces to share costs and expand their options,” Ms Mercorella said.

“Pooling resources can open the door to higher-quality properties or better-located homes that might otherwise be out of reach for individuals renting alone.

“This trend is particularly evident across southeast Queensland, where it’s not uncommon to see four or more tenants sharing premium properties, making higher rents more manageable on a per-person basis.

“With plenty of major projects on the Gold and Sunshine Coasts, we’re hearing about some cases of ‘drive-in, drive-out’ workers – where due to cost of fuel, tradies are renting in groups near their worksites during the week to avoid daily back and forth trips.

“We’re also noticing multi-generational living arrangements emerging, with extended families coming together under one roof – grandparents, parents, and their young, teenage or adult children, renting larger six- or seven-bedroom homes.”

Ms Mercorella said co-tenancy is a practical response to affordability pressures, but it’s not likely to be a long-term solution to Queensland’s rental housing shortfall.

“To ease pressure sustainably, we need to address the underlying issue of housing supply, and we need more pathways to help renters transition into home ownership where possible.”