Australian home prices fell for a third consecutive month in June, dropping 0.3% nationally, as higher interest rates and cost-of-living pressures continued to weigh on buyer activity, according to the latest PropTrack Home Price Index.
The RBA left the cash rate on hold at 4.35% at its June meeting, but the effect of three earlier 2026 rate rises is still flowing through to borrowing capacity and buyer sentiment.
Sydney and Perth posted the steepest monthly falls among the capitals, both down 0.5%, with Melbourne and Canberra close behind at -0.4% each. Brisbane, Adelaide, and Hobart recorded more modest declines of 0.2% apiece, while Darwin bucked the trend entirely, edging up 0.2% to rank as the second-strongest capital performer over the year, behind Perth. Across the capitals as a group, prices slipped 0.4% over the month, while regional markets held their ground, recording no change in June.
Despite the recent softening, national prices remain 5.8% higher than a year ago, and Melbourne is currently the only capital where the median home price sits below where it was 12 months prior. Regional areas have fared considerably better over the year, with the combined regional median up 9.5% annually and values still sitting at record highs in every regional area except Queensland.
REA Group senior economist Anne Flaherty said the pattern reflects buyers gravitating toward value.
"The strongest performing parts of the market continue to be those offering the greatest affordability," Flaherty said, noting regional markets and units have outperformed houses and capital cities on both a monthly and annual basis.
She also flagged the federal budget as a factor shaping buyer caution.
"The budget may have also contributed to more cautious decision making among both owner occupying buyers and investors," Flaherty said, adding that "the full impact of the budget on investor demand remains to be seen."
Looking ahead, Flaherty said affordability-driven demand is likely to keep building.
"Overall, conditions appear to have improved for first-home buyers, who will benefit from lower home prices and less investor competition in 2026," she said.
For existing borrowers, the pressure is mounting on a different front: Roy Morgan data shows mortgage stress hit a four-year high in June, with more than 1.5 million borrowers now considered at risk. Brokers may find both conversations live at once: helping affordability-driven buyers move on cooling prices, while flagging refinancing options to existing clients feeling the pinch.
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