Years of high interest rates have helped most cheap properties outsell high-end properties.

“It’s a shift in demand from higher price points to the mid- and lower-end of the market.”

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Westpac senior economist Matthew Hassan said the impact was evident in most capital cities across the country.

“The performance of second-tier markets such as Brisbane, Adelaide and Perth has been particularly notable,” he said. “This is not just a byproduct of the high interest rate environment and tight affordability, but also the low stock levels in the market.”

Mr Hassan said the slowdown in high-end price growth could be a sign that home affordability had reached its limits and prices were approaching a peak.

“It’s actually quite unusual. In the past, the high end of the market would lead the cycle. This could mean the cycle is starting to run out of fuel,” he said. “Maybe there are other factors at play … we’re running out of places for buyers to choose from.”

“The only places where you can afford to buy a house are in unpopular markets like apartment buildings.”

Mr Lawless said the cost of living crisis was weighing on demand in a number of ways, exacerbating the difficulty of buying a home.

“We’ve also found that saving money is becoming increasingly difficult due to high living costs and rental expenses.

“When rental costs are so high, many first-home buyers will find it difficult to save money.”

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Mr Hassan said the prevalence of home lenders in the housing market showed housing affordability was becoming increasingly tight.

“We know the bank of mum and dad has always been a more significant source of funding … I suspect it’s now becoming a prerequisite in some of the smaller capital city markets as well,” he said.

Anthony Landahl, managing director of Equilibria Finance, said would-be buyers were turning to properties in more affordable markets, looking to get a foothold in the property market even if they didn’t want to live there.

“People who might traditionally have bought a home are investing in cheaper areas and renting where they want to live,” he said.

Randall said that also helps explain the above-normal growth in the bottom quartile.

“The data shows that in most capital and regional cities, the lower quartile is attracting buyers,” he said.

Mr Lawless said if interest rates continued to rise, price growth in the cheaper end of the market would start to lose momentum as homes became less affordable even for middle-income earners.

But he said the rate cut would strengthen borrowing capacity and sentiment.

“This could mean we see prices rise again. Underlying affordability pressures remain … the lack of housing supply is a key factor supporting house prices.”

He noted that interest rate cuts could help boost supply as economic conditions become more favorable for building again.

Hassan is pessimistic about the prospect of price increases following the rate cut, and believes the impact of a rate cut is likely to be modest given that the market has become disconnected from the interest rate cycle.

“If rates come down, we think it will be a slow and gradual process that won’t unlock a lot of affordability,” he said. “This is already an unusual price cycle … it’s front-loaded with a lot of potential price appreciation.”