Australia’s housing downturn stopped being a Sydney and Melbourne story in July. Cotality’s national Home Value Index fell 0.7 per cent, the sharpest monthly drop since December 2022, and for the first time this cycle five of the eight capitals are now negative over the rolling quarter, a list that now includes Brisbane and Adelaide alongside Sydney, Melbourne and Canberra (Cotality). Three Reserve Bank rate rises since February have done more to cool demand than eighteen months of affordability warnings ever did.
What Happened This Month in the Australian Property Market
National dwelling values fell 0.7 per cent in July, taking the national median to $928,421, around 1.4 per cent below the March 2026 peak (Cotality). PropTrack’s separate index told a similar story, with its national measure down 0.3 per cent for a fourth consecutive month to a median of roughly $894,000, still 3.9 per cent higher than a year ago (PropTrack). Combined capital values fell 0.9 per cent for the month while combined regional values slipped 0.2 per cent, the first regional decline since January 2023.
Three cash rate rises this year, in February, March and May, took the cash rate from 3.60 per cent to 4.35 per cent and have compressed borrowing capacity across every price tier (RBA). Softer June quarter inflation, released 30 July at 3.8 per cent headline and 3.6 per cent trimmed mean, has shifted market pricing toward a hold at the Board’s 11 August meeting, though the outcome will not be known until after this article is published. Federal Budget changes limiting negative gearing to new builds from July 2027 and replacing the 50 per cent capital gains tax discount are also starting to shape investor decisions well ahead of that deadline. These are tax settings, so a qualified accountant or tax adviser is best placed to assess how they apply to any individual’s circumstances.
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4 Feb 2026Hold at 3.60%
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18 Feb 2026Hike to 3.85%, first rise of the year
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17 Mar 2026Hike to 4.10%
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5 May 2026Hike to 4.35%, Board voted 8-1
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11 Aug 2026Decision pending, hold widely expected after softer CPI
Sydney Median House Price and Market Conditions
Sydney dwelling values fell 1.4 per cent in July, the steepest monthly fall of any capital and the main driver of the national result (Cotality). The median house value sits at $1,579,396 and the median unit at $904,326, with annual growth slowing to 2.3 per cent as estimated sales volumes run around 17 per cent below year-ago levels.
Auction clearance bounced to 56.1 per cent in the first week of August, though close to a third of scheduled auctions were withdrawn, a sign vendors are still adjusting expectations rather than the market firming outright (Cotality auction results). On the rental side, Sydney house rents hit a record $850 a week, up 6.3 per cent over the June quarter and 7.6 per cent annually, the strongest quarterly increase in four years (Domain).
Melbourne Median House Price and Market Conditions
Melbourne values fell 1.2 per cent in July, the second-largest fall among the capitals. The median house sits at $958,361 and the median unit at $636,769, with annual growth of just 0.5 per cent, the weakest of any capital.
Auction volumes rose 18 per cent week-on-week to 707, still around 10.1 per cent below year-ago levels, with clearance easing slightly to 54.6 per cent. Unlike Sydney, Melbourne’s rental market has cooled: unit rents held flat at a record $600 a week in the June quarter, with annual growth down to 4.3 per cent, a four-and-a-half-year low (Domain).
Brisbane Median House Price and Market Conditions
Brisbane joined the negative column in July, down 0.6 per cent for the month even as annual growth remains strong at 19.1 per cent. The median house value is $1,232,690 and the median unit $884,881.
The clearance rate has sat below 40 per cent for nine consecutive weeks, printing 30.5 per cent in the first week of August, a sharp reversal for a market that was among the country’s hottest through 2024 and 2025 (Cotality). Rents are still climbing, reaching a record $700 a week, up 2.9 per cent over the June quarter (Domain).
Perth Median House Price and Market Conditions
Perth was one of only three capitals still recording gains in July, up 0.1 per cent for the month, though that is a marked slowdown from the pace that has defined the city’s boom. Annual growth remains the strongest in the country at 25.8 per cent, and the median house value has reached $1,097,164 against a median unit value of $768,808.
The Real Estate Institute of Western Australia says the median house sale price is on track to reach $1 million by year end if the current trajectory holds (REIWA). Perth also has the tightest rental market of the five largest capitals, with vacancy at 0.6 per cent.
Adelaide Median House Price and Market Conditions
Adelaide slipped 0.2 per cent in July, described by Cotality as “barely positive” on a rolling quarterly basis after a long run of double-digit annual growth. Annual growth has eased to 12.3 per cent, with the median house at $1,013,138 and the median unit at $697,499.
Auction clearance held up better than most at 52.6 per cent, and rental conditions remain tight with vacancy at 0.7 per cent, among the lowest of the five largest capitals.
Smaller Markets: Hobart, Darwin and Canberra
Hobart edged up 0.1 per cent in July, with the median house at $807,533 and the median unit at $580,265. Darwin was the strongest performer in the country, up 0.8 per cent for the month and 20.3 per cent annually, with house rents reaching a record $760 a week, up 5.6 per cent over the June quarter and 11.8 per cent annually, enough to overtake Perth as the second most expensive capital for house rents (Domain).
Canberra recorded the largest fall outside Sydney and Melbourne, down 1.0 per cent in July, with the median house at $1,040,041 and the median unit at $598,931. Its rental vacancy rate of 1.7 per cent is the loosest of any capital, giving tenants comparatively more choice than elsewhere in the country.
| City | Median House | Median Unit | Annual Change |
|---|---|---|---|
| Sydney | $1,579,396 | $904,326 | +2.3% |
| Melbourne | $958,361 | $636,769 | +0.5% |
| Brisbane | $1,232,690 | $884,881 | +19.1% |
| Perth | $1,097,164 | $768,808 | +25.8% |
| Adelaide | $1,013,138 | $697,499 | +12.3% |
| Hobart | $807,533 | $580,265 | +9.3% |
| Darwin | $759,997 | $461,472 | +20.3% |
| Canberra | $1,040,041 | $598,931 | +4.3% |
Rental Market Snapshot: Vacancy Rates and Rents
The national rental vacancy rate ticked up to 1.3 per cent in June, from 1.2 per cent in May, but every capital city remains below the 2.0 per cent level generally considered a balanced market (SQM Research). Combined capital house rents rose $20 over the June quarter, lifting annual growth to its strongest pace in almost two years, while unit rents rose a more modest $5, a growing gap between the two markets (Domain).
The rental market has effectively split in two. Sydney, Brisbane, Canberra and Darwin are still recording strong rent growth, while Melbourne, Adelaide, Perth and Hobart are showing early signs that affordability is starting to cap further increases. For anyone weighing up an investment property purchase, rental yield trends like these are one of several factors worth exploring with a broker alongside financing structure and personal circumstances.
Lending and Finance Trends
The most recent quarterly lending data, covering the March quarter, shows the early impact of this year’s rate rises flowing through to loan volumes. Total new loan commitments for dwellings fell 6.2 per cent in number and 3.8 per cent in value over the quarter, with owner-occupier commitments down 6.9 per cent in number and investor commitments down 5.3 per cent (ABS). This is the most recent quarterly release available at time of writing.
Supply told a different story. Building approvals rose 7.2 per cent in June to 18,328 dwellings, driven by a 69.9 per cent surge in apartment approvals, while house approvals were roughly flat at 0.4 per cent (ABS). A total of 205,249 dwellings were approved across the 2025-26 financial year, up 9.2 per cent on the year before, though approvals still need to translate into completions before they ease supply pressure. Periods like this are when many borrowers already in a loan choose to review whether their current loan structure still fits, rather than trying to guess the exact top or bottom of the cycle.
What to Watch Next Month
The RBA hands down its decision on 11 August, a day after this article was prepared. Markets and three of the four major banks are leaning toward a hold at 4.35 per cent following the softer June quarter inflation print, though at least one major bank is still calling for a further rise. Governor Bullock’s press conference commentary will matter as much as the decision itself for anyone trying to read where rates head from here.
Auction clearance rates have now sat below 50 per cent for nine straight weeks. Whether that run extends into a tenth week, or breaks as spring listings begin to build, will say a lot about whether July’s broader downturn is a temporary reaction to the rate rises or the start of a longer repricing. Investors adjusting ahead of the July 2027 negative gearing changes are also one to watch, since decisions made now, well before the deadline, are already showing up in investor loan volumes.
The next Cotality and PropTrack index reads are due in the first days of September and will show whether August’s rate decision changed buyer behaviour. September quarter CPI, due in late October, will shape the RBA’s final two meetings of the year.
- National home values fell 0.7 per cent in July, the sharpest monthly fall since December 2022, as the downturn broadened from two capitals to five.
- Sydney (-1.4%) and Melbourne (-1.2%) remain the weakest major markets, while Darwin, Perth and Hobart are still recording gains, though at a slower pace than earlier in the year.
- The RBA hands down its next decision on 11 August, with most economists expecting a hold at 4.35 per cent after softer June quarter inflation.
- Auction clearance rates have sat below 50 per cent for nine straight weeks, the weakest stretch of this cycle.
- Rental markets remain split: Sydney, Brisbane, Darwin and Canberra are still posting strong rent growth, while Melbourne, Adelaide, Perth and Hobart show early signs of an affordability ceiling.
- New lending fell across owner-occupiers, investors and first home buyers in the March quarter, even as building approvals rose 7.2 per cent in June.
- Federal Budget changes limiting negative gearing to new builds from July 2027 are already shaping investor decisions well ahead of the deadline.