Home prices held broadly flat in May, with combined capital cities dipping 0.1% and both Sydney and Melbourne recording 0.2% falls, according to PropTrack's May Home Price Index.
More than 40% of Australia's SA4 regions posted a monthly decline, reflecting a broader easing across the market.
REA Group senior economic analyst Megan Lieu (pictured) attributes the softening to two main forces. Three consecutive cash rate hikes between February and May have "lowered borrowing capacities for those looking to buy and constrained demand at current price levels," while recent budget tax reforms are expected to dampen investor appetite for established properties.
Auction clearance rates have also slipped to their lowest levels since 2020 nationally, pointing to a growing gap between what buyers are willing to pay and what sellers expect.
The appeal of these more affordable, outer-lying suburbs comes against a backdrop of worsening affordability more broadly. According to Moody’s, Australia's housing affordability was at 29.6% in March, meaning nearly a third of the average household's after-tax income is now needed to service a typical new loan, with Sydney the least affordable capital at 40.4%.
Despite the broader slowdown, buyer search activity from the "buy" section of realestate.com.au has climbed year-on-year in specific suburbs across every capital city, often well ahead of price trends.
Lieu notes that while "searches don't directly translate to transactions, rising search volumes highlight where buyer interest may convert into future demand."
Tree-change and lifestyle suburbs led the gains in several cities. Sydney's Cowan topped the list with a 33% jump in searches, followed by Kyeemagh and Faulconbridge, while Adelaide's Paracombe, Charleston, and Heathfield, all offering country living with city access, posted increases between 23% and 37%. Acreage-heavy suburbs also stood out, with Melbourne's Oaklands Junction, Avonsleigh, and Badger Creek up as much as 39%.
Affordability-driven corridors told a similar story elsewhere. Brisbane's Ipswich suburbs, Forest Hill and Summerholm, saw searches climb 42% and 31% respectively, while Perth, Hobart, Darwin, and Canberra each recorded similar surges. Canberra posted the sharpest jumps nationally, with Oxley up 70%.
Lieu points out that despite the overall pullback, national search activity in May still sits above the 2024–2025 monthly average, suggesting underlying demand remains present even as momentum cools. For brokers, these emerging hotspots may offer useful insight into where client demand could firm up next, even as the broader market takes stock.
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