A 20% Fall in Perth Lands in April 2025. The Same Fall in Melbourne Wipes Five Years

1. The national number is the wrong tool

Australia’s housing market is valued at $12.4 trillion across 11.5 million dwellings — 56.8 per cent of household wealth. The July flow is a 0.7 per cent fall in the Home Value Index, the largest monthly decline since December 2022. Capital-city sales fell 3.5 per cent over the year to July; regional sales rose 4.2 per cent. The national sales print, down 0.8 per cent, averages two markets pulling opposite ways. Clearance rates slid from around 66 per cent in February to the low 40s by the end of July; median days to sell were 35, and the vendor discount widened to 3.8 per cent.

None of that is a sentence you can read unchanged to a Melbourne owner-occupier and a Perth investor. Gerard Burg, Cotality’s Head of Research: although housing values are falling across more cities, underlying supply and demand conditions remain quite different. Markets that experienced the strongest growth over recent years are entering this downturn from a much stronger position. Sydney and Melbourne are already more than 5 per cent below their respective peaks. Brisbane and Adelaide have entered modest downturns over the past two months. Perth still holds the largest buffer of the major capitals. Quote the national 0.7 per cent to all five and you have said something technically true and practically useless.

2. What Cotality modelled — not a forecast

The August 2026 Monthly Housing Chart Pack, published 14 August, is not a crash call. Burg modelled what a 20 per cent fall from peak dwelling values would reset each capital to. The pack illustrates the implications of those scenarios. It is not a prediction of where values land.

The drivers Cotality lists are already in your serviceability notes: affordability, mortgage serviceability, higher rates, cost of living, weaker confidence, and reduced investor activity after the federal budget. None of those is a 20 per cent crash. They are the conditions in which values have started to ease, from very different starting points.

ABC News, on the same day, published separate colour that must stay separate. ANZ modelling — not Cotality — cited property prices falling 4.3 per cent this year and 3.4 per cent in 2027, driven by a 14.5 per cent peak-to-trough decline in Sydney and 12.8 per cent in Melbourne. PRD chief economist Diaswati Mardiasmo said it would take a GFC-type situation for a 20 per cent fall, and that a 5 per cent drop is more realistic given inflation has been going down every month since March. Use ANZ as ANZ. Use PRD as PRD. Use Cotality as a scenario table.

3. Five cities, five different 20% resets

Walk them thickest buffer to thinnest. Perth has the largest buffer of the major capitals: a 20 per cent downturn returns values only to around April 2025, after one of the strongest growth cycles of any capital. Brisbane entered a downturn only two months ago; a 20 per cent correction still sits around August 2024. Adelaide’s 20 per cent reset is around April 2024, after a modest downturn over the past two months.

Sydney is already down over 5 per cent from peak. A 20 per cent downturn would return values to around May 2021 — after massive pandemic gains. “Back to 2021” without that clause is a worse sentence.

Melbourne has the smallest buffer of any major capital. Peak median dwelling value was $840,000 in November 2025. Burg: Melbourne’s home values have recorded very little growth over the past five years, meaning a decline beyond 10 per cent would return values to pre-pandemic levels. Cotality did not publish a month for a 20 per cent Melbourne fall. Do not invent one. The 20 per cent number is the same in every column. The year it lands in is not.

Mortgage Professional Australia and Elite Agent carried the same Cotality figures on 14 August. The broker job is not to add more of them.

4. Thin buffer, thick buffer

“Markets such as Perth, Brisbane and Adelaide recorded exceptional growth over the past five years, giving them a more significant buffer against declines than cities where values have been comparatively flat.”

A buffer is not a promise that values will hold. It is the growth a market can give back before the client is sitting on a price they last saw years ago. In Perth, 20 per cent still leaves the median inside last year’s market. In Melbourne, a bit more than 10 per cent wipes the post-pandemic cycle. Those are not the same valuation-risk conversation, and they are not the same LVR-headroom conversation.

For an owner-occupier, the buffer tells you how quickly a refinance or top-up fails a valuation. For an investor, it tells you how quickly equity that looked comfortable becomes a problem if they need to recast, sell or add. Serviceability is separate — rent, rates, the budget — and Cotality listed reduced investor activity after the federal budget as a driver. Do not use a valuation scenario as a serviceability assessment. “We are in a downturn” is a local fact with a national average attached, not the other way around.

5. When a minor correction becomes a refinance problem

A 5 per cent move is already in the past for Sydney and Melbourne — both already more than 5 per cent below their respective peaks. If a client in those cities is talking about a 5 per cent correction as a future event, they are late. A loan written near Melbourne’s November 2025 peak (median $840,000) is sitting in a market that has already given some of it back. LVR headroom that looked fine at origination is thinner now. If they need a new valuation for a refinance, top-up, split or variation, the valuation is the gate.

Brisbane and Adelaide are earlier in the turn. Two months of modest downturn is not more than 5 per cent off peak. Treating those files like Melbourne files is not safer. It is less precise. The other error is the Perth investor who hears “the market is falling” and assumes a Melbourne-style wipeout. The Chart Pack says a 20 per cent fall still lands around April 2025. That is not a reason to tell them to buy more. It is a reason not to use Melbourne’s buffer as Perth’s.

A hold does not force a new valuation. A refinance often does. The Monday-morning distinction is not “is the market down”. It is “does this client need a valuer to sign a number, and in which city”.

6. Melbourne OO versus Perth investor

Melbourne owner-occupier

Do not open with the national index. Open with the city: peak median $840,000 in November 2025, already more than 5 per cent below that peak, and a decline beyond 10 per cent takes values back to pre-pandemic levels. Then their loan: where was the valuation at origination relative to that peak, what LVR are they on now, and does a conservative val still clear the lender’s cap without LMI — or with LMI they can service? That is valuation risk and refinance timing. It is not “Melbourne is crashing”. Cotality did not say that.

Perth investor

Open with the cycle they bought into. Exceptional growth over five years. Largest buffer of the major capitals. A 20 per cent fall from peak — modelled, not forecast — still sits around April 2025. Then the file: serviceability after the budget, actual rental income (national rental growth 5.9 per cent in July, gross yields 3.7 per cent — city yields will differ), and whether they are holding, refinancing or adding. Reduced investor activity after the federal budget is on Cotality’s driver list. That belongs here more than a crash narrative. The tighter constraint is often serviceability and policy, not a 20 per cent valuation wipeout.

Same broker. Same week. Two different sentences. That is the job.

7. How to use the buffer on a file

Stop quoting a national percentage to a client in a city that does not behave like the average. Then write down that you did.

1. Name the city, not the index. Write the city and the published Cotality reset on the file before you quote a national percentage to anyone.
2. Locate the client’s valuation against what you can actually cite. For Melbourne, November 2025 is the published peak median. For the other capitals, Cotality did not publish a peak month in the figures used here — do not invent one. Use the client’s own valuation date and the published buffer language.
3. Test LVR at a conservative val. Ask what happens to LVR if the next val comes in 5 or 10 per cent under the last one. Sydney and Melbourne have already done more than 5 per cent. That is not a hypothetical in those two cities.
4. Separate refinance from hold. A hold does not need a new valuation. A refinance, top-up or variation often does. The buffer matters when a valuer has to sign a number.
5. Keep ANZ and PRD off the Cotality line. If you mention ANZ’s 4.3 and 3.4 per cent, or Mardiasmo’s view that 5 per cent is more realistic than 20, attribute them. Do not merge them into “the market will fall 20 per cent”.
6. Record the conversation. Note that you explained the city buffer, that Cotality’s 20 per cent figures are scenarios not a forecast, and that you did not advise the client to buy or sell on the back of them.