June 2026
Australian home prices flatlined in May, as the Reserve Bank of Australia (RBA) extended its cycle of interest rate hikes in response to untamed inflation.
The Albanese government also introduced landmark tax changes that seek to improve home affordability by undermining the ability of investors to engage in negative gearing.
These changes, however, could create buying opportunities in the near-term while stepping up demand for new builds once they come into effect next year.
Australia home prices plateau
Nationwide home prices in Australia held stationary in May, with Cotality’s national Home Value Index coming in at 0.0%.
Australia’s two most popular cities accounted for much of the flatlining, with Sydney dwelling prices falling 0.9% in May and Melbourne’s housing market posting a 0.8% decline. Sydney is now 2.1% below its cyclical high in November of last year, while Melbourne is down 2.9%.
While other capitals continued to post gains, the impetus beneath housing prices is flagging. Perth and Darwin saw the strongest monthly growth in May with a 1.5% rise, while Brisbane and Hobart saw 0.9% increases and Adelaide rose 0.5%.
Tim Lawless, Cotality research director, said this diverging performance had been characteristic of Australia’s housing market since the pandemic.
“We are continuing to see multi-speed conditions across Australia’s housing sector, with Perth and Melbourne at opposite ends of the spectrum.”
“The past five years have seen these cities diverge sharply, with Perth values up a stunning 91.4% while Melbourne home values are only 3.3% higher since May 2021.”
Housing fundamentals remain unchanged
Key headwinds for Australia’s housing market at present include an environment of rising interest rates – following the RBA’s decision to lift the cash rate by 25 basis points to 4.35% in May.
Even more importantly, when it comes to structural trends on the Australian housing market was the latest budget, which introduced tax changes that will restrict negative gearing to new properties from July 2027.
The changes also replace Australia’s 50 per cent capital gains tax discount with a rate adjusted for inflation.
While the adjustments are intended to favour entrants to the housing market, Michael Yardney of Metropole Property Strategists argues that the budget fails to address the real cause of Australia’s housing affordability problem, which is a supply issue.
As a consequence, the underlying fundamentals of the housing market point to the persistence of upward pressure on dwelling values, as supply continues to fall short of demand.
Yardney points out that this shortfall in supply is the result of labour shortages and higher materials costs, as well as limited access to finance and land and approval delays.
The latest data from the Australian Bureau of Statistics (ABS) indicates that the total number of dwellings approved fell 3.4 per cent in April to 16,710, while private sector housing approvals fell 1.0 per cent.
The slide in housing approvals arrives despite the official launch of the National Housing Accord nearly two years ago, with the goal of remedying Australia’s home affordability crisis with the creation of one million new, well-located homes over a five-year period.
Kevin You, senior fellow at the Institute of Public Affairs (IPA), points out that the Accord has never reached its minimum monthly target, and housing approvals are now lower than they were in the middle of the pandemic.
David Ingram, CEO of CrowdProperty Australia, said this failure to build enough new builds on schedule favours long-term price gains, irrespective of tax changes.
David Ingram, CEO of CrowdProperty Australia, said the current focus on a potential correction misses the longer-term picture.
“Even a 10 per cent correction takes us back to a market we were already calling unaffordable just a few years ago,” said Ingram. “The structural imbalance between housing supply and demand has not changed. Australia has failed to approve and fund the build of enough homes to meet population growth for decades.”
Tax changes to create opportunities
Rob Flux from Property Developer Network expects the budget’s tax changes to create opportunities for developers and investors in both the short-term and long-term, despite the uncertainty created by the policy.
“For the next 12 months, investors will stay away from the market, which is going to create huge buying opportunities for anyone who is not currently in a deal,” Flux said.
“Once we get to July 2027 and the changes come into effect, I see a huge increase in demand from investors for brand new products that create additional dwellings, because those are the only things that will get the 50% capital gains tax and negative gearing.”
“First home buyers will also receive incentives for buying brand new stock, further increasing demand.”
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Opinions or views expressed represent the thoughts of individuals and not those of CrowdProperty or Quay.
May 2026
Growth in Australian housing values has eased considerably as inflation and the war in Iran prompt the Reserve Bank of Australia (RBA) to turn hawkish and resume rate hikes.
Opportunities are likely to be found at the cheaper end of the housing market, which is seeing far stronger price growth due to Australia’s scarcity of affordable, entry-level homes.
Sydney and Melbourne home prices slide
Growth in Cotality’s national home value index came in at 0.3 percent for April, its lowest point since January 2025.
Nationwide growth in Australian housing prices was held back by the poor performance of the Sydney and Melbourne property markets, where dwelling values slid 0.6 percent over the month.
While the other capital cities continue to see home prices rise, the pace of growth has fallen across the board. Perth came in first with a 2.1 percent rise, followed by Darwin with a 1.3 percent increase, and Brisbane with a 1.2 percent lift.
Tim Lawless, Cotality’s research director, said Australia’s easing property market is expected to come under even greater pressure in the near-term, with the RBA resuming a tightening stance in response to the resurgence of inflation driven by the war in Iran and oil price shocks.
“The housing market was losing momentum from late last year as affordability and serviceability constraints weighed on demand,” he said.
“Now we have the additional downside pressure of higher interest rates, sentiment has fallen off a cliff, and rising inflation is set to drive the cost of debt even higher.”
On 5 May, the RBA announced it would hike its cash rate target by 25 basis points to 4.35 percent, due to concerns over a pickup in inflation as fuel and commodity prices rise.
Negative gearing budget changes create market uncertainty
This year’s much-anticipated federal budget has proposed a major change to Australia’s tax regime that could significantly impact the nationwide housing market.
Treasurer Jim Chalmers announced plans to remove the 50 percent capital gains tax (CGT) discount introduced by Peter Costello in 1999, a policy widely seen as helping drive the rise of negative gearing among Australian property investors.
Critics say the policy reshaped investor behaviour by making property investment more tax-effective, increasing competition for lower-priced homes and making it harder for first-home buyers to enter the market.
If legislated, the changes are expected to take effect from July next year, with Treasury estimating the reforms could help an additional 75,000 Australians become owner-occupiers over the coming decade, following years of declining home ownership rates.
Opportunities lie with cheaper homes
Developers should keep a sharp eye on the increasingly varied performances of Australia’s many different property sub-markets, with cheaper housing expected to hold up better under the pressure of higher interest rates, particularly amid uncertainty surrounding the federal budget’s proposed changes to the CGT discount.
Michael Yardney, founder of Metropole Property Strategists, indicated the Australian property market has fragmented into a slew of highly varied micro-markets all moving in different directions.
These property sub-markets aren’t just spread across Australia’s many geographic regions, they often co-exist, with home prices in one area performing very differently to those in directly adjacent areas.
“The Australian property market isn’t just moving in different directions across cities,” Yardney writes. “It’s splitting within the same city, sometimes within the same suburb.”
Nerida Conisbee, chief economist at Ray White, uses the expression “K-Turn” to describe the stark divergence in the performance of Australia’s housing micro-markets.
Given worsening home affordability in the wake of sustained growth in dwelling values, premium Australian residential properties are struggling to achieve price gains.
Cheaper housing in the same areas continues to see strong price growth, as the very same affordability challenges heighten demand for down-market properties.
According to Conisbee, since 2023 the Sydney housing market has exemplified this divergence in home price performance.
Cheaper housing at the 25th percentile of the Sydney market has seen price gains twice as rapid as those of more expensive properties at the 75th percentile.
This means that even if interest rate hikes induce a downturn in the housing market, prices for cheaper properties could remain robust due to Australia’s worsening scarcity of affordable entry-level homes.
Yardney points out that over the past decade, national house sales under $750,000 have plunged, from around 248,000 in 2015 to just 153,000 in 2025.
As a consequence, developers and investors should pay close attention to opportunities at the cheaper end of the market, keeping in mind that these opportunities could be found within larger regional markets that are posting an overall sluggish performance.
While cheaper housing shows stronger price growth, Sydney’s development economics make this the hardest segment to deliver profitably. Building an apartment now costs $608,200 on average, up 90% since 2019, making entry-level product unviable at prices the market can absorb. Sydney developers have rationally focused on the downsizer and premium segment, where asset-rich baby boomers rightsizing into larger apartments can absorb delivery costs. The economics work; the sentiment fits.
Whether the 2026 budget changes this calculus remains to be seen. Limiting negative gearing to new builds and a new $2 billion Local Infrastructure Fund may improve feasibility at the margins, but construction cost barriers go unaddressed. Treasury’s own modelling suggests roughly 7,500 additional first-home purchases per year over the next decade is meaningful, but modest against the scale of Sydney’s undersupply. As CrowdProperty’s David Ingram puts it: “The 2026 budget takes some steps in the right direction — limiting negative gearing to new builds and committing $2 billion to local infrastructure are welcome signals. But none of this touches the core problem: it still costs more to build an apartment than most buyers can pay. Until we solve that equation, the supply we need won’t get built.” For developers, the smarter near-term play still points firmly toward the mid-to-upper market.
CrowdProperty provides fast, simple and transparent property project finance for property professionals, learn more.
Opinions or views expressed represent the thoughts of individuals and not those of CrowdProperty or Quay.
April 2026
Australia’s home prices continued to post overall gains in March, with the mid-tier capitals compensating for slight value declines in Sydney and Melbourne.
Untamed inflationary pressure, compounded by the War in Iran, will create headwinds for home prices in the form of further rate hikes from the Reserve Bank of Australia (RBA). However, investors and developers could still find opportunities for home price growth in the nation’s more affordable regions.
Mid-tier cities lead home price growth
Divergence in the performances of Australia’s multiple housing markets has become further pronounced, with mid-tier capital cities outside the south-eastern coast posting robust gains to drive nationwide growth in dwelling values.
Cotality’s national home value index posted an increase of 0.7 per cent in March, bringing the total increase for the first quarter of 2026 to 2.1 per cent.
The mid-tier cities saw growth of 1.2 per cent or more in month-on-month terms in March, just as Sydney and Melbourne saw declines of 0.1 per cent and 0.2 per cent respectively.
Perth led March gains with a 2.5 per cent increase, followed by Brisbane with a 1.8 per cent gain, Darwin with a 1.6 per cent rise, and Adelaide with growth of 1.2 per cent.
Tim Lawless, Cotality’s research director, highlighted the divergence in home price movements between Australia’s major population centers, with Sydney and Melbourne now struggling to stay afloat.
“Since the end of November 2025, Melbourne values have retreated by -0.9 per cent and the Sydney market is down -0.4 per cent,” Lawless said.
“The softer trend in values coincides with falling auction clearance rates and a pickup in advertised supply, providing buyers with more choice and less urgency at the negotiation table.”
Resurgent inflation puts rate cut hopes on hold
The latest data from the Australian Bureau of Statistics (ABS) points to the persistence of inflationary pressure throughout the economy.
The ABS’ consumer price index (CPI) for the 12 months to February came in at 3.7 per cent. Only slightly below the rate of 3.8 per cent posted in January, and still considerably above the band of 2-3 per cent inflation that is generally preferred by the world’s monetary authorities.
The RBA tends to focus on the trimmed mean CPI as a more reflective measure of inflation. That metric came in at 3.3 per cent for February, also indicating the persistence of robust inflationary pressure.
Sally Tindall, insights director at Canstar, said the latest data makes it almost certain that the RBA will push through with a third rate hike – particularly given the further inflationary impact created by the War in Iran.
“CPI figures offer little reprieve in the fight against inflation,” Tindall said.
“There’s no calm before the storm, but instead, persistent inflation that is set to spike once the Middle East conflict hits next month’s data, just six days out from the RBA’s next meeting.”
A third rate hike would bring the cash rate to its highest level since November 2011, as well as result in a 7.4 per cent increase in the monthly repayments of a typical mortgage borrower.
K-shaped economy means fragmentation in price movements
Persistent inflation and the ensuing raft of rate hikes create major headwinds for Australian property prices by raising the cost of borrowing for homebuyers.
The fundamentals of the Australian housing market nonetheless support further gains in dwelling values, as supply fails to keep pace with demand that continues to rise on the back of strong migration.
One of the results of this is now the huge variation in the health and performance of Australia’s housing markets, both between regions and within regions themselves.
Nerdia Conisbee, chief economist at Ray White, has referred to this divergence in price performance as a “K-Turn” in the housing market, with cities like Perth vastly outpacing Sydney and Melbourne.
While price growth for premium properties has petered out with waning affordability, Australia’s cheaper home markets continue to see robust gains as buyers scramble for deals.
This trend has been further exacerbated by government measures to support first-time homebuyers – such as the expansion of the federal government’s 5 per cent deposit guarantee scheme in October last year, which steps up demand for cheaper properties.
Investors and developers need to keep an eye on this fragmentation of the Australian property market, as it will mean different risks and opportunities for different areas.
Affordable areas within cities could continue to see price gains from new entrants to the property market, even if inflation drives interest rates higher.
In terms of broader regional splits, South Australia continues to show promise as a redoubt of affordable housing, while Melbourne and Darwin have resumed a strong growth trajectory, after previously underperforming compared to Australia’s other capital cities.
Australia’s smaller capital cities have emerged as the clear winners in home price growth since the start of 2026, and they’re playing an outsized role in driving nationwide momentum. At the same time, Sydney and Melbourne continue to face real headwinds as affordability constraints weigh on the country’s two largest markets.
“At CrowdProperty, we’re seeing this play out firsthand – project loan applications and settlements have picked up noticeably in cities like Adelaide, Hobart and Fremantle, where demand remains strong for well-located townhouses and apartments that people genuinely want to live in and can actually afford.
Despite the potential for energy-related inflation and further rate hikes to create near-term challenges, Australian housing prices will continue to find support from the fundamental shortfall of supply relative to demand. That said, investors and developers need to stay keenly aware that this story will play out very differently across Australia’s many regional and sub-regional markets. Understanding the real local dynamics is what separates good projects from great ones – this can vary from street to street.”
CrowdProperty provides fast, simple and transparent property project finance for property professionals, learn more.
Opinions or views expressed represent the thoughts of individuals and not those of CrowdProperty or Quay.
