Australia has the highest uptake of solar panels in the world as sustainable housing fixtures gain popularity, though homebuyers have been undaunted by record floods in Brisbane, where the median house price jumped by a quarter in the year to June.

The latest QBE Housing Outlook says Perth is expected to take over from Brisbane as best performing home price market as the Australian housing market corrects, driven by rising interest rates to limit inflation.

Sydney’s median house price is expected to fall 14% in 2023, the largest capital city decline due to high household indebtedness and construction costs.

Median house price falls of 11% in Melbourne and Brisbane in 2023 are forecast, as are falls of 4% in Perth, 3% in Darwin and 8% in Canberra, Adelaide and Hobart.

Perth and Darwin are the only capital cities forecast to have higher house prices three years from now, with WA helped by a buoyant resource sector and population flows.

Median values in Sydney, Melbourne, Brisbane, Canberra, Adelaide and Hobart are all predicted to be lower by June 2025. The median price in Melbourne is forecast to be below that of Canberra.

The report, written by BIS Oxford Economics and commissioned by QBE Lenders’ Mortgage Insurance (LMI), says consumers are increasingly opting for “green” home choices.

LED lighting and better insulation are among the most highly installed energy saving initiatives, while lighter coloured roofs, double glazed windows, and efficient solar hot water systems also play a role.

“We want to drive the green housing conversation here in Australia,” QBE LMI GM Pat Priest said. "We’re so excited about Green LMI, our sustainable innovation that lowers the cost of LMI for green approved home loans provided by our exclusive lenders.”

QBE announced this week it will provide a 5% rate reduction on the cost of LMI for National Bank of Australia or Bank Australia customers who hold a green mortgage. Ms Priest says premiums will be directed into social and environmental impact investments through QBE’s Premiums4Good initiative.

Australia has nearly 3.2 million rooftop solar installations, or around 30% of all homes, with rates of 43% in SA, 40% in Queensland and 38% in WA. Ms Priest says a 5kW rooftop solar system will save the average Australian household $909 a year on electricity costs.

"With Australia’s residential sector producing 15% of the nation’s total greenhouse gas emissions, this not only offers huge benefits to the environment but to consumers who stand to save on energy costs by making these changes.”

Adoption of lighter coloured roofs, double glazed windows, and solar or heat pump hot water systems – which use 60-70% less energy than a conventional electric system - still remains relatively low overall, but is rising, the report says.

Last year, Brisbane’s housing market was the strongest performer, with the median house price increasing 32% over the year - compared to 22% nationally.

“Brisbane continued to outperform most cities through 2022, despite enduring major flooding earlier in the year,” the report says. Relative affordability compared to Sydney and Melbourne was a driver, though the report says "this gap is waning.”

Here are median capital city house price forecasts for June 2025:

Sydney $1.405 million (currently $1.531 million)

Melbourne $995,000 ($1.06 million)

Brisbane $819,000 ($864,000)

Perth $679,000 ($665,000)

Adelaide $676,000 ($718,000)

Hobart $776,000 ($811,000)

Canberra $996,000 ($1.019 million)

Darwin $647,000 ($627,000)

See the 2022-25 Housing Outlook Green Edition here.