Australia’s 2-speed property market: Is your city growing or falling?
Key takeaways
- Property prices in Sydney, Melbourne and Canberra are going backwards, while growth is starting to slow in other cities.
- Nationwide, property prices were flat month-on-month for the first time since January 2025.
- What's next: Rising rates, high inflation and tax changes all suggest property prices will fall further in the months ahead.
Australian property prices have flattened. The latest figures from Cotality show 0% nationwide growth in property prices over the last month.
If you're looking at just the capital cities, growth was flat over the last three months, and prices actually dipped 0.1% in the last month.
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Not one property market, but many
"We are continuing to see multispeed conditions across Australia's housing sector, with Perth and Melbourne at opposite ends of the spectrum" over the past five years, said Cotality research director Tim Lawless.
While Perth's runaway growth is slowing, WA's capital has still seen 25.8% growth in the last 12 months. It's now the country's third most expensive city.
Melbourne, meanwhile, is down 0.8% just this month. Lawless noted that " Melbourne home values are only 3.3% higher since May 2021."
In the same time, Perth has grown 91.4%.
Sydney is falling too, down 0.9% last month and 2.1% for the quarter. Sydney's growth over the last 12 months is just 2.3%.
Canberra has also seen a small monthly dip of 0.2%. Brisbane and Adelaide are still recording healthy growth, although the pace is starting to slow.
Darwin is still seeing strong growth. The city's prices have grown 1.5% in the last month and 20.3% over the year. Low median values make it the most affordable of the capitals, even after this strong growth.
Melbourne is now the third cheapest capital city, ahead of Darwin and Hobart.
What's driving the property slowdown?
Property prices have been slowing for a while now, so flat growth now is not a surprise. And the factors are very clear:
- Inflation is high. Inflation remains very high, which is sucking up money Australians could be spending on property. Fuel price shocks haven't helped, but inflation has been persistent for much longer regardless.
- Interest rates are rising. One consequence of inflation is higher interest rates, which makes borrowing more expensive. It's harder to get a home loan, and buyers can't borrow as much now.
- Supply is higher in cities with falling prices. Lawless notes that in places like Sydney and Melbourne "advertised supply has risen to above average levels, providing more choice and better leverage for buyers."
- Tax changes disincentivise investors. The federal budget last month made sweeping changes to investor-friendly tax policies. While these changes have not come into effect yet, and in some cases are grandfathered, it will likely help drive prices down further.
Will property prices keep falling?
All the signs suggest we're going to see further slowdown in prices. Inflation isn't going and interest rates could go even higher this year.
But Australia is a big country with a diverse housing market. While it's not the best time to be selling a multi-million dollar home in Sydney or Melbourne, we'll likely see first home buyers drive demand at the more affordable end of the market. And some regional centres are still seeing property prices grow.
And even if prices do fall further, it's important to put this in perspective. Australian property prices still grew 12.5% nationwide in the last 12 months. The median Sydney property currently costs almost $1.3 million.
Prices might fall, but that won't make housing much more affordable.
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