Australia's property downturn gathered pace in July, with Cotality's national Home Value Index falling 0.7% — the largest single-month decline since December 2022 — as previously resilient mid-sized capitals were pulled into negative territory alongside Sydney and Melbourne.
Sydney and Melbourne continued to lead the slide, down 1.4% and 1.2% respectively over the month. Melbourne values peaked back in November, while Sydney's high point came in January.
More notably, the softening has now caught up with Brisbane and Adelaide, down 0.6% and 0.2% respectively — revised data shows this marks the second consecutive monthly decline for both cities. Perth managed a modest 0.1% gain in July, but that follows a downwardly revised 0.5% contraction in June.
Cotality head of research Gerard Burg (pictured) said the scale of recent revisions reflects how fast conditions are shifting.
"These revisions highlight the rapid evolution in the market, particularly across the mid-sized capitals," Burg said. "Perth in particular has seen significant shifts, with June growth revised 120 basis points lower in our latest update, which pulled the once-booming city into negative territory for that month."
The pain remains concentrated at the top end: upper-quartile values fell 3.2% nationally over the three months to July, against a 0.3% gain for the lower price tier — a sign the correction is hitting premium buyers hardest while affordability-driven demand continues to support cheaper stock.
Borrower pressure is rising in parallel — Roy Morgan reported mortgage stress reached 30.3% of mortgage holders in the three months to June, the highest level since June 2024, though still below the 35.6% peak recorded in mid-2008.
EMBED: Cotality Home Value Index
Behind the price falls sits a mismatch between buyer and seller expectations. Burg pointed to rate rises, higher fuel costs, and weak consumer confidence — driven partly by the Iran conflict and this year's federal budget changes — as demand-side pressures now working in the same direction. Sellers have been slower to adjust, though a shift is emerging in the listings data.
"We have observed a deterioration in the flow of new listings across the country in recent weeks, led by Sydney, as potential vendors assess a weak market and choose to wait until conditions improve," Burg said.
Even so, total capital city listings sit 5.7% above the five-year average, and auction clearance rates have stayed below 50% since late May.
The regions haven't escaped either. The combined regional index fell 0.2% in July — its first decline since January 2023 — led by Regional NSW (-0.4%), with Regional VIC and Regional QLD both down 0.3%. Regional SA and WA remain the exceptions, posting gains of 1.4% and 0.9% respectively.
For brokers, the widening downturn points to longer settlement negotiations and more price-sensitive client conversations in the months ahead. That could shift depending on the RBA's next meeting on 11 August — the first test of whether the pause holds.
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