National home prices fell 0.2% in August, according to realestate.com.au's latest Home Price Report, marking the fifth consecutive monthly decline. Prices now sit 2.7% below their March 2026 peak, though annual growth remains positive at 1.8%, continuing to moderate as the downturn drags on.
Capital city values fell a steeper 0.3% over the month and are now 3.6% below their peak, with annual growth across the combined capitals slowing to just 0.2%.
Report author and realestate.com.au senior economist Eleanor Creagh (pictured) said borrowing costs remain the central constraint on the market.
"National home prices fell for a fifth consecutive month in August, as higher interest rates continue to constrain borrowing capacities and weigh on housing demand," Creagh said.
That pressure reflects the Reserve Bank's decision to hold the cash rate at 4.35% for a second consecutive meeting on 11 August, following three hikes earlier in the year, with the board leaving a further increase on the table.
The divergence extends well beyond individual cities. National house prices fell 0.3% in August while units slipped just 0.1%, and annually, units have outperformed houses, rising 3.0% compared with 1.5%, as affordability pressures push buyers toward cheaper properties.
Regional prices sit just 0.5% below their peak, against a 3.6% shortfall for the capitals, with regional annual growth running at 6.6% versus 0.2% in the capitals.
Adelaide illustrates how quickly momentum can turn even in a market that has run hot: it recorded the largest capital city fall in August, down 0.9%, despite home values there still climbing 71.5% over the past five years. Canberra (-0.4%) and Sydney and Brisbane (both -0.3%) also fell. Darwin was the sole exception, recording 0.1% growth in August and reaching a fresh peak, extending its run as the strongest-performing capital over the past year with prices up 14.1%.
That divergence between individual capital cities is part of a broader pattern Creagh described as increasingly uneven.
"The housing downturn remains orderly, but increasingly uneven, with regional markets proving considerably more resilient than the capitals," she said.
Creagh cautioned the softening trend has further to run.
"Further price falls are likely to be seen over the coming months, particularly across the capital cities. Uncertainty around tax changes, the outlook for interest rates, and ongoing price falls, continue to weigh on confidence, keeping some buyers on the sidelines," she said.
That tax-related caution is already visible in lending data — investor loan commitments fell 8.6% in the June quarter, the sharpest drop since September 2022, following the budget's negative gearing and capital gains tax reforms.
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