Cotality's Home Value Index recorded a 0.4% national fall in June, the sharpest monthly decline since December 2022, with annual growth slowing to 7.3%.
The broader indicators tell the same story: auction clearance rates have sat below 50% since late May, advertised stock keeps climbing, and capital city sales volumes are running more than 16% below last year's levels. Taken together, the data points to buyers gaining more negotiating room in the current market.
The slowdown is broadest where it started: Sydney and Melbourne. Values there fell 3.2% and 2.6% respectively over the June quarter, dragging the combined capital city figure down 1.3%.
Westpac's Matthew Hassan wrote in the bank's June dwelling prices bulletin: "Corrections in Sydney and Melbourne are becoming more pronounced, led by material declines in 'top tier' segments," with turnover down sharply alongside the price falls.
But the mid-sized capitals are cooling too, even if they haven't tipped into decline. Adelaide values were flat in June, and Brisbane and Perth posted only modest gains of 0.3% and 0.7% respectively — both well down on the pace seen earlier in the cycle, suggesting these markets have less of a buffer left before they follow Sydney and Melbourne into outright falls.
Not every market is retreating, however: regional areas continue to outperform their capital city counterparts, lifting 0.3% in June and 1.1% over the quarter.
Cotality research director Tim Lawless (pictured) pointed to a build-up of pressures rather than a single trigger: "Even before interest rates rose by 75-basis points, we were seeing affordability hurdles weighing on buyer demand."
Uncertainty around how the market will absorb the federal tax policy changes and weak consumer sentiment have since added to the strain on borrowing capacity and buyer confidence, with both remaining live watch points for the second half of the year.
William Buck's analysis points to a further risk on the horizon: one more interest rate rise in the September quarter, which would add to the downward pressure already building in the market. Chief economist Besa Deda also flagged that the now-legislated changes to negative gearing and capital gains tax are prompting some investors to reassess their appetite for residential property — a pullback that, given how important investor demand has been in recent years, could add further downward pressure on established dwelling values. William Buck has revised its 2026 forecast accordingly, now expecting national dwelling values to fall around 1% for the year, with steeper declines likely in Sydney and Melbourne.
The Cotality report points to the same combination of pressures — affordability hurdles, rate rises, tax policy fallout, and weak sentiment — working together to weigh on demand.
With rate settings still unresolved and the tax changes now working through the market, Hassan cautioned that markets already in correction — chiefly Sydney and Melbourne — remain “somewhat prone to air pockets emerging near term.”
Taken together, this points to a market where borrowing capacity and serviceability conversations remain live, and where conditions continue to favour buyers over sellers in the near term.
For the full data and analysis, read Cotality's Home Value Index report and Westpac IQ's June dwelling prices bulletin.
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