Housing Fever

Australia

The Australian housing market weakened more broadly over the September quarter of 2026. Prices fell in six of the eight capitals, with declines of around 3 to 4 per cent in Brisbane, Sydney, Perth, Adelaide, and Melbourne, and a smaller fall in Canberra. Hobart was little changed, and Darwin was the only capital to record a gain. Unlike in the June quarter, the softening now extends to the mid-tier markets. Price-to-rent ratios declined in all nine series over the quarter, as prices fell while rents continued to rise.

The fever index, which accounts for real interest rates and housing supply in addition to rents, shows speculative pressure easing further at the national level. The national index fell for a second consecutive quarter, by more than in the June quarter, and is now at its lowest level since early 2021. Sydney and Melbourne continued to move lower and remain below the bubble-neutral level, at their lowest readings since the series began in 2012, both manifesting sustained declines over the last four years. Canberra and Darwin eased slightly.

The mid-tier markets, where speculative pressure has built up most over the past three years, are showing signs of turning. Perth recorded the largest fall of any capital, and the plateau noted last quarter has given way to a steady decline since April. Brisbane moved lower in July and has held broadly steady since, while Adelaide was essentially flat near its recent peak. Hobart is now the only capital where the index is still rising. Even so, the indexes for Adelaide, Brisbane, Hobart, and Perth remain well above the bubble-neutral level, so speculative pressure in these markets is easing from elevated levels rather than unwinding.

New Zealand

Conditions in the New Zealand housing market softened slightly over the September quarter. Both median prices and price-to-rent ratios edged lower nationally and in most regions. The fever index has drifted lower across all regions over the past year, and the national index is now at its lowest level since mid-2024. Wellington remains well above the other regions, but its index has eased from the peak reached in late 2025, a decline that has held over each of the past three months. Auckland and Otago have moved steadily lower since early 2026 and are now at their lowest readings since the series began in 2012. Otago’s downward trajectory, evident since 2022, manifests a significant historic departure from the other regions. Canterbury, Bay of Plenty, and Waikato fluctuated without a clear direction and remain close to or slightly below the bubble-neutral level.

Australia

The Australian housing market cooled over the June quarter of 2026, with the divergence observed in recent quarters beginning to narrow. Prices fell in Canberra, Sydney, and Melbourne, each by around 3 per cent over the quarter, while Brisbane and Adelaide were essentially flat. Perth, Hobart, and Darwin continued to record gains, but at a slower pace than earlier in the year. Over the past twelve months the mid-tier markets remain well ahead, with Perth, Darwin, Brisbane, Adelaide, and Hobart all up by 10 per cent or more, against little change in Sydney, Melbourne, and Canberra.

Price-to-rent ratios softened more broadly. Ratios declined in seven of the nine series over the quarter, with the largest falls in Sydney, Canberra, and Melbourne. Only Hobart and Darwin recorded modest increases. The declines in Brisbane, Adelaide, and Perth were slight, indicating that prices and rents in those markets have recently moved in tandem after several quarters in which prices ran ahead of rents.

The fever index, which accounts for real interest rates and housing supply in addition to rents, points to an easing of speculative pressure at the national level. The national index declined over the quarter, its first quarterly fall since late 2024 and the largest in the past three years, following five consecutive quarterly increases. The easing was shared by Sydney, Melbourne, and Canberra, all of which moved lower. The picture across the mid-tier markets is more mixed than in recent quarters. Adelaide and Hobart continued to rise, and Brisbane advanced modestly, so speculative pressure in these markets remains elevated by historical standards. Perth, by contrast, was little changed over the quarter after a sustained climb through 2025, suggesting that its index has begun to plateau rather than extend further. Sydney and Melbourne remain the most subdued of the capitals.

New Zealand

Conditions in the New Zealand housing market remained subdued over the June quarter. House prices and price-to-rent ratios were broadly unchanged from the previous quarter across both the national and regional markets, continuing the stability of the past year. Month-to-month movements in these series reflect the volatility of the underlying median prices rather than any change in trend. The fever index continues to show regional divergence, though narrowing somewhat this quarter. Wellington remains well above the other regions, but its index has plateaued since late 2025. Otago remains the lowest of the regions and continued to decline, extending the downward trajectory evident since 2022. The rest were broadly stable near their historical averages.

Australia

March 2026 shows a growing divergence in Australian capital city housing markets. Brisbane, Adelaide, and Perth are leading a steep upswing in prices, with Darwin also showing a sharp acceleration in recent months. Hobart continues to experience steady growth. In contrast, Canberra and Sydney are plateauing, while Melbourne has begun to show slight price declines.

Price-to-rent ratios, which focus on the relationship between prices and rental fundamentals, point to intensifying valuation pressure in Brisbane, Adelaide, Perth, and Darwin. Hobart’s ratio is also continuing its upward trend. Canberra and Sydney remain broadly flat, while Melbourne is now visibly declining, indicating that rental growth is outpacing price growth in that market.

The fever index paints a sharper and more differentiated picture. In addition to rents, the index incorporates interest rates and housing supply, capturing speculative intensity. Viewed through this broader lens, the market splits into three distinct groups:

• Extreme and surging speculative pressure: Adelaide (which has spiked drastically), Brisbane, Perth, and Hobart.
• Moderate pressure: Darwin, Canberra, and the national average (AU).
• Low or declining pressure: Sydney (stable/flat) and Melbourne (declining sharply).

Comparison of these measures highlights an important distinction. While Darwin shows a sharply rising price-to-rent ratio, it exhibits only moderate speculative pressure once financing and housing supply factors are taken into account. Conversely, Adelaide, Brisbane, Perth, and Hobart display aggressively consistent upward signals across both metrics, confirming that price growth in these markets is heavily driven by speculative dynamics rather than fundamentals alone.

Overall, the combined evidence indicates that the nationwide aggregate masks a highly fragmented landscape. Speculative risk is intensely concentrated in a handful of capitals (most notably Adelaide, Brisbane, and Perth). Meanwhile, Sydney remains relatively balanced, and Melbourne is now exhibiting a pronounced cooling trend across all metrics, reflecting a complete departure from the speculative pressures seen elsewhere in the country.

New Zealand

The New Zealand housing market remains stable following the sharp correction in 2022. As in previous quarters, both national and regional price-to-rent ratios remain broadly unchanged through the March 2026 quarter, indicating a continued equilibrium between housing prices and rental income.

In contrast, the fever index, which incorporates interest rates and housing supply conditions in addition to rents, continues to reveal meaningful regional divergence, though with a notable shift this quarter. The sharp upward momentum previously observed in Wellington has abruptly broken, with the index recording a steep drop in Q1 2026, suggesting a sudden easing of speculative pressure. Meanwhile, the long-term decline observed in Otago since 2022 has fully flattened out, with the region’s index now stabilizing at a low baseline. Most other regions remain clustered around or slightly below the national average with only minor fluctuations.