Australia's property market may be losing momentum in some quarters, but a closer look at the data reveals a more nuanced picture: prices are still heading higher across the majority of the country, creating real opportunity for well-positioned borrowers and investors.
PropTrack figures covering the three months to the end of May show that values rose in almost two-thirds of Australia's SA3 regions — the geographic units used by the Australian Bureau of Statistics to track local housing activity. The headline softness driven by inner Sydney and Melbourne is masking a far more resilient story in Queensland, South Australia, Western Australia, Tasmania, and regional New South Wales.
REA Group senior economist Anne Flaherty (pictured) put it plainly: "Prices are still moving upwards in the majority of areas around the country."
Federal budget changes restricting negative gearing to new properties and overhauling capital gains tax concessions — on top of three RBA rate rises earlier in the year — have introduced real headwinds.
The most recent PropTrack Home Price Index confirms the broader market impact: national prices were essentially flat in May (down just 0.04%), with capital city values falling 0.1% while regional areas continued to grow, up 0.2% for the month — albeit at the slowest monthly pace since 2023. Sydney and Melbourne each recorded their third consecutive monthly decline, though both cities remain only 1.2% below their March peak. Yet in markets where buyer demand outstrips available stock, those pressures are largely being absorbed.
"It just comes down to supply and demand," Flaherty said. "Even when we have headwinds to property market conditions like higher rates or a decrease in investor demand, in areas where more buyers are looking compared to the number of properties for sale, we can still see prices rise."
The standout capital city performer was Brisbane's west, where the Sherwood–Indooroopilly SA3 region — encompassing suburbs such as St Lucia, Taringa, and Indooroopilly — surged 12.3% in just three months, driven by school-zone buyers trading up in Brisbane's inner west. Fremantle in Perth followed at 6%, fuelled by downsizing owner-occupiers and east coast buyers seeking a Perth base.
The broader Perth market, however, is beginning to ease: PropTrack's May data recorded Perth's first monthly price decline since late 2024, a modest fall of 0.1%, even as the city remains 20.6% higher than a year ago. Several pockets of Adelaide's north and Hobart's northwest also featured prominently.
The regional story is, if anything, even more striking. Regional Queensland and New South Wales are producing some of the country's strongest short-term results, with house values rising more than 7% in three months across parts of north Queensland including Innisfail, Port Douglas, and the Noosa hinterland. Regional NSW towns — Lithgow, Mudgee, Albury, Wagga Wagga, and the Upper Hunter — are likewise outperforming the broader market.
Flaherty said there is a counterintuitive dynamic at play: rising rates and cost-of-living pressure are actively redirecting buyers toward more affordable corridors.
"Affordability is ironically one of the things that can drive higher property price growth in certain areas," she said. "If we are in a situation where rates are high and the cost of living is high, that can drive demand in those more affordable growth corridors and regional areas."
For unit buyers, Adelaide's CBD recorded a 7.8% quarterly rise. Ray White Adelaide City director Andrew Downing noted that reduced investor activity has created room for first-home buyers.
"Properties that are suitable for first-home buyers are still pretty strong," Downing said. "There has definitely been investor drop-off, but that's probably helped first-home buyers."
For broker clients who purchased established investment properties after budget night on 12 May, rental losses can no longer be offset against wages or other income from 1 July 2027, and the 50% CGT discount will be replaced by a restructured concession with a 30% minimum tax on capital gains.
The modifications to negative gearing are expected to reshape rather than decimate investor activity. Flaherty said well-capitalised buyers with less reliance on borrowing or tax concessions remain active.
"We will see the composition of investors change," she said. "Cashed up investors are still going to be active in the market, but investors who are more sensitive to what a bank is going to lend are less likely to enter the market."
For mortgage brokers, the opportunity hasn't disappeared — it has shifted.
For the full realestate.com.au analysis, click here.
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