Australia's residential property market is showing signs of a "potential turning point," according to Herron Todd White's (HTW) July 2026 Month in Review, as the Reserve Bank's latest move intersects with sweeping new property tax settings.
That characterisation follows the RBA's confirmed decision to hold the cash rate at 4.35% at its June meeting — a unanimous call after three consecutive hikes — while flagging it remained prepared to tighten further if needed.
HTW's national overview, authored by residential director Shannan Chandler (pictured), points to negative gearing and capital gains tax changes announced in May's federal budget as a key driver of the shift, alongside "Middle Eastern volatility" and broader economic uncertainty.
The reforms restrict negative gearing benefits to new-builds only and replace the 50% CGT discount with cost-based indexation and a 30% minimum tax rate. The ATO has since confirmed these measures are now law, with properties held before 7:30pm AEST on 12 May 2026 grandfathered from the negative gearing changes, and the CGT reforms applying only to gains accrued after 1 July 2027.
Against that backdrop, Chandler notes that "the residential property market remains highly segmented," with performance diverging sharply by city and price point. Prestige buyers in particular have turned cautious, with sentiment "broadly easing as a direct result of the decline in the broader economic environment, instability in the Middle East and reduced borrowing capacity."
HTW's national Prestige Property Monitor underscores the cooling trend, easing to 58 out of 100 in July — its lowest reading since the index launched in February, when it sat at 66. Perth remains the standout, holding at 80 and continuing to sit at the top of "warm" territory on the back of chronic undersupply, while Sydney (40) and Melbourne (35) have slipped into Balanced-to-Cool territory.
Auction clearance rates offer a telling signal for the top end of the Sydney market. The report notes Sydney's auction clearance rate has been "falling below 50% in June and July, against the mid-to-high 60s recorded in the same period last year."
Not every capital is retreating. Brisbane has "maintained its positive price trajectory" even as larger cities falter, per Cotality figures cited in the report, with annual growth of 17.4% to a median value of $1,118,306. Perth and Adelaide have also posted strong annual returns, up 23.9 per cent and 11.6 per cent respectively.
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