The property market is moving, and it pays to be well-informed. National home values have recorded their first monthly fall in years, and auction clearance rates remain stubbornly low. So what does this mean for you?
Auction activity is cooling
The combined capital city auction clearance rate has now spent five straight weeks below 50 percent, according to Cotality. Rising interest rates and broader economic concerns have put buyers off, further cooling the market as we head deeper into winter.
Granted, winter traditionally brings an auction slowdown, but the numbers are well below where they sat this time last year. Cotality reported auction volumes running 14.5 percent lower than the same week last year, with further falls expected through July.
Home values have turned
Cotality’s national Home Value Index fell 0.4 percent in June, the largest monthly decline since December 2022. Sydney led the falls, down 1.2 percent, followed by Melbourne at 1.0 percent and Canberra at 0.6 percent. It marks the third consecutive monthly decline for both Sydney and Melbourne.
Not every capital is falling, though. Brisbane and Perth still recorded modest gains in June, and Adelaide held steady. But the trend is clear: capital city values dropped 1.3 percent over the June quarter, the sharpest quarterly result in years.
Despite that, the national median home value still sits around $938,000, roughly 7 percent higher than a year ago. Recent changes to property taxation and rising interest rates are the leading causes of the pullback, according to Cotality, but values remain within one percent of their recent peak.
Zoom out further and the picture changes again. Home values have grown around 34 percent nationally over the past five years, with enormous growth in Adelaide (75 percent), Brisbane (81 percent) and Perth (91 percent).
There are still areas bucking the trend
While the softening is a national story, it does not affect all markets the same way. Real estate agents are reporting that family-friendly suburbs filled with owner-occupiers rather than investors are holding up well.
Lalor and Mill Park in Melbourne’s north both reported a 71 percent clearance rate, attracting local buyers rather than investors, according to Cate Bakos, buyer’s agent and chair of the Property Investment Professionals of Australia (PIPA).
Regional markets have also outperformed the cities over the month and the quarter, with regional values rising 0.3 percent in June while the capitals fell. Six of the top 10 housing markets for annual price growth were found in the regions, led by areas such as Darling Downs in Queensland (22.6 percent over the 12 months to June) and Mandurah in WA (19.1 percent).
Units are also reportedly outperforming houses for price growth, and faced smaller declines over the month. This is particularly evident in Sydney, where unit values rose 0.2 percent during June while house values declined 0.8 percent. Affordability is the main driver, with many buyers priced out of houses opting for the cheaper alternative.
What does the future look like?
The market is driven by consumer sentiment, and that has soured over the past three months. Many buyers are worried about another rate rise, and while that is not off the table, some economists believe it is looking less likely for the remainder of 2026. If it becomes clear that another rise is not incoming, sentiment could well improve.
The spanner in the works is the recent tax changes announced in the Federal Budget, including limits on negative gearing for established properties from July 2027 and changes to the capital gains tax discount. Most analysts expect these to keep softening home prices in the short term. Over the long term, however, the fundamentals have not changed: housing supply continues to lag population growth, which is likely to limit how far prices can fall.
The important thing to remember is that downturns do not last forever, and timing the market is incredibly difficult, even for the professionals.
If you are ready to buy, the best first step is getting your finances in order, and that is exactly where our team can help. With access to over 40 lenders, we can help you understand your borrowing power in the current market. No pressure, no jargon, just simple guidance.
If you are not sure whether you are in the right financial position, it is also worth speaking to your financial adviser to avoid nasty surprises down the track, such as negative equity.
This article contains general information only and does not take into account your personal objectives, financial situation or needs. Consider whether the information is appropriate for your circumstances before acting on it, and seek professional advice where appropriate.