Property prices are falling, but sellers haven’t got the message yet
Key takeaways
- Property prices dropped 0.4% nationwide last month, driven by major falls in Sydney and Melbourne. Regional property prices grew 0.3%.
- Affordability issues and high rates may keep prices down for the rest of the year.
- What's next: Auction clearance rates are under 50%, suggesting sellers are setting prices too high.
Last month, Australian property prices saw 0% month-on-month growth. Now prices are going backwards.
Cotality's monthly Home Value Index saw a monthly price fall of 0.4%, the largest monthly drop since late 2022.
The combined capital cities saw a drop of 0.6%, while regional markets grew by 0.3% and are slowing.
Cotality Home Value Index figures, June 2026. Image: Cotality
The Sydney-Melbourne-ACT downturn
Sydney and Melbourne are now seeing sustained property price falls. Prices in Sydney fell 1.2% over the last month, and 3.2% for the quarter.
Melbourne prices fell 1.0% monthly and are now down 2.6% in the last three months.
It's worth keeping in mind that the median Sydney property still sells for over $1.2 million.
Melbourne is a different story completely. The median property now sits at just over $800,000. It's the third cheapest capital city after Darwin and Hobart.
Canberra prices fell 0.6% for the month.
Slow growth, no growth elsewhere
Even stronger markets like Brisbane are slowing (0.3% growth last month). Adelaide saw 0% growth.
Regional markets are still seeing growth (0.3% last month), but this is slowing too.
It's the same in some of the smaller cities, where strong growth is slowing down. Perth prices grew 0.7% last, but are still up an eye-watering 23.9% annually.
Hobart recorded 0.6% monthly growth, while Darwin is the standout at 1.4% monthly growth.
Have sellers got the message yet?
Auction clearance rates have been below 50% since May. This suggests sellers are going to auction with inflated expectations.
"Such low clearance rates indicate a mismatch between buyer and seller pricing expectations. Buyers now have more stock to choose from and less urgency in their decision-making," said Cotality research director Tim Lawless.
And while the stock of homes for sale is high, Lawless also notes that this is not simply because there are more homes on the market.
"It's a symptom of less demand in the market, which has led to an accumulation of advertised stock."
Will property prices go even lower?
While you should never bet against the indefatigable Australian property market, multiple factors make a sustained price fall seem likely.
Tax changes in the May budget make property investing less appealing, driving competition for properties down.
The cost of living remains a major challenge and means buyers have less money at the end of the day for property.
Interest rates are at a 2-year high, and if they increase any further (which they could if high inflation persists) this will make it even harder for borrowers to stretch their budgets.
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