Tighter stock and lower price points support ongoing growth outside the largest capitals
Australia’s housing market has split into two distinct tracks early in 2026, with Sydney and Melbourne prices stalling while mid-sized capitals record steady gains, according to new data from Cotality.
Perth led the market in February, with dwelling values rising 2.3% for the month and lifting the city’s median by more than $22,500. Brisbane, Adelaide and Hobart also posted monthly increases above 1%, underscoring ongoing strength outside the two largest capitals.
Source: Cotality
By contrast, Sydney and Melbourne showed little movement. Both cities recorded flat values in February, with prices edging down by 0.1% and 0.4% respectively over the rolling quarter, following the latest interest rate rise and a weakening in buyer sentiment.
“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,” said Tim Lawless (pictured right), research director at Cotality.
Recent listing activity helps explain the divergence. Over the four weeks to Feb. 22, Perth’s advertised stock remained 48% below its five-year average, with Brisbane 31% lower and Adelaide 23% below typical levels. Tight supply in these cities is supporting further price gains despite higher borrowing costs.
Sydney and Melbourne are also operating with relatively low overall stock, but the gap to historical norms is far smaller – down 1% and 4.3% against their five-year averages. In addition, both markets have seen a clear rise in the flow of new listings through February.
Freshly advertised properties now sit 9.7% above the five-year average in Sydney and almost 12% higher in Melbourne, increasing choice for buyers and adding to competitive pressure among vendors.
“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.”
Across the capitals, the more affordable segments of the market are proving more resilient than higher-priced stock. In Sydney, lower-quartile house values climbed 0.8% over the month, while upper-quartile house values declined 0.9%. Similar patterns are evident in other capital cities, with value growth skewed towards cheaper dwellings.
“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.”
Regional areas are mirroring these dynamics. Markets outside the capitals are outperforming across New South Wales, Victoria, South Australia and Tasmania. Lower price points and signs of rising internal migration are helping to sustain demand, maintaining interest from both owner-occupiers and investors.
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