Housing market marks ‘counter-cyclical’ start to new year

Yasmine Raso

Senior Journalist, Financial Newswire

2 March 2026

Two months into the new year and Australian housing market trends have already flipped, with all other capital cities besides Sydney and Melbourne managing to record fresh gains in dwelling values over the quarter.

According to Cotality’s latest Home Value Index, Sydney and Melbourne have “flatlined” at -0.1 per cent and -0.4 per cent in the last quarter while Brisbane (4.8 per cent), Adelaide (4.3 per cent), Perth (6.8 per cent), Hobart (2.6 per cent), Darwin (3.6 per cent) and Canberra (1.3 per cent) have all managed to see some “solid” gains.

Perth was highlighted in particular for adding more than $22,500 or 2.3 per cent to the median dwelling value month-on-month, responding quite well to the Reserve Bank of Australia’s (RBA’s) decision to hike the official cash rate in February.

“The clear slowdown in housing conditions across Sydney and Melbourne could signal an easing in growth conditions elsewhere down the track, but for now, the mid-sized capitals continue to see support from extremely low inventory levels, which is boosting the growth in values,” Tim Lawless, Cotality’s research director, said.

Despite dropping the ranks in terms of dwelling value, Sydney (up 9.7 per cent) and Melbourne (up 12 per cent) saw an uplift in the flow of new listings through February, while Perth listings remained 48 per cent below their five-year average, Brisbane at 31 per cent below and Adelaide at 23 per cent below.

“Vendors are looking more motivated in Sydney and Melbourne, possibly looking to beat a further softening in selling conditions as clearance rates ease and demand slows,” Lawless said.

“If the typical seasonal pattern holds, the flow of new listings is likely to strengthen leading into Easter.”

At the same time, Cotality’s research also found that the more affordable end of the housing market spectrum had seen some growth with Sydney’s lower quartile house values up 0.8 per cent over the month of February, while upper quartile house values fell 0.9 per cent.

“There is a lot of competition for lower-priced properties,” Lawless said.

“First home buyers, investors and subsequent buyers are all competing across this sector of the market, while credit is less available across the higher price points due to serviceability constraints.”

The research also showed that while capital city rents rose a little faster than home values over the past two months to deliver a gross rental yield of 3.4 per cent, “opportunities for cash flow” in Australia’s rental market remain tight. Darwin saw the largest increase in rental growth over the last 12 months (8.1 per cent), which was followed by Hobart (6.9 per cent), Perth (6.4 per cent), Brisbane (6.3 per cent), and Sydney (5.7 per cent). Melbourne (3.5 per cent), Adelaide (3.3 per cent) and Canberra (2.9 per cent) all experienced some softening.

“Factoring in holding costs like mortgage repayments, maintenance, insurance and taxes, it’s likely most investors new to the market will be facing a cash flow shortfall,” Lawless said.

“That is, unless they have a large deposit or are purchasing in high-yielding markets like Darwin or some regional locations.”