Australia’s real estate market may display an unusual tendency: the first houses that lose value are not necessarily the cheapest.
The new statistics published by Cotality, a real estate analytics company, on September 10, 2026, and cited in SBS News on September 14, 2026, show that Australia’s market for luxurious houses is leading in terms of decline in the cities of Sydney and Melbourne. The houses that are in the top quartile — the top 25% of the most expensive properties — fell in price by 10.7% in Sydney and by 10.5% in Melbourne since the highest point was reached.
This decline is more than two times greater than the fall in the value of houses that were less expensive, which makes Australia’s property classification system a potential indicator of what may happen in the housing market in the near future.
The juxtaposition is quite evident. Cotality discovered that the difference between cumulative price declines experienced by the top and bottom quarters is now at 6.6 percentage and 5.3 percentage in Melbourne and Sydney, respectively.
The most notable case was with Balmain East in Sydney, where a mansion worth nearly A$20 million in 2022 was sold for A$12.8 million this month, amounting to an A$7 million loss (around US$5 million). The initial amount of A$20 million comes to around US$14.3 million, whereas the current sale equals approximately US$9.2 million based on the AUD/USD exchange rate of US$0.717 per AUD.
A broader issue related to the figures mentioned above is the decrease in borrowing power.
The top tier of the property market historically leads the real estate cycle, according to SBS News, which cited insights from Tim Lawless, the executive research director at property analytics firm Cotality. While the broader Australian housing market experienced its overall peak in March 2026, values in the premium sector—representing the upper quartile or top 25% of properties—peaked earlier, around October and November 2025.
The limitations imposed on borrowing capacities and deterioration of affordability have acted as a filtering process, resulting in movement of demand towards the lower-priced segments. Currently, there is an inverted market situation where first-time buyers, investors, and price-conscious buyers are competing against each other for affordable properties, while the premium segment is experiencing a lack of buyers, leading to declines in more expensive properties.
The decline is especially significant in the two largest markets of Australia. In cities like Sydney and Melbourne, the upper-quartile values have decreased at more than double the rate of entry-level homes, as they fell by more than 10% from their peak values. The decline can be contrasted with middle-sized capitals like Brisbane, Adelaide, and Perth, which have recently stopped rising, though the gap in price segments is not that drastic.
As for the statistics, it shows that house prices have fallen by 3.1% in the past three months before August 2026, while the total supply has reached 139,100 properties, which is much more than a year ago, as this value is 18.1% higher in comparison with the previous year’s values.
Auction results also indicate a slowdown. In capital cities, the number of auctions fell by 31.1% in comparison with the same time last year, which indicates increased caution from both sellers and buyers.
For the housing market in Australia, the important question is not whether the elite sector has already opened. It has indeed opened.
The bigger question is whether that opening remains only at the top of the market or develops into a crack that will sweep through the entire pyramid.
