Saunders described conditions as a “two-speed housing market”, with Perth, Brisbane, and Adelaide recording considerably stronger growth than Sydney and Melbourne. Data from Cotality Australia, CBA and Macrobond show Perth prices have outpaced the national average by more than 40% since the start of the pandemic, while Brisbane prices are about 30% higher.
The divergence, Saunders said, is largely driven by population growth relative to housing supply. “In Sydney and Melbourne, construction has actually outpaced population growth. Those are the cities where prices have come in below the national average.”
In Sydney, affordability pressures have shifted buyer behaviour towards the lower end of the market. “There’s been more activity at the more affordable end, where affordability pressures are more binding,” Saunders said.
Despite the expected slowdown, Saunders said a national price decline remains unlikely. “The biggest driver is higher interest rates,” he said. “For markets like Perth, Brisbane, and Adelaide, fundamentals remain strong. We expect growth to slow, not reverse.”
At the core of Australia’s affordability challenges, Saunders said, is a persistent shortfall in housing supply. “We’re not building enough housing at the same time that population growth has been strong,” he said. Construction continues to fall short of targets set under Australia’s National Housing Accord, which aims to deliver 1.2 million new homes over the five years to June 2029.