Australia home prices post steepest monthly fall in three and a half years

Australian home prices fell 0.4% in June from May, the steepest monthly drop in three and a half years, as higher borrowing costs weighed on a five-year run-up that had pushed values more than 30% higher. National prices were still 7.3% above a year earlier, but downward revisions to earlier months put the market peak in March and the second-quarter decline at 0.7%.

The weakness was concentrated in the biggest eastern capitals. Sydney home values fell 1.2% in June and Melbourne dropped 1.0%, while Adelaide was flat. Brisbane rose 0.3% and Perth gained 0.7%. Cotality’s June chart pack put Sydney dwelling values 0.9% below May and 2.1% below their November 2025 peak, while Melbourne values were 3.2% below their March 2022 high. Tim Lawless, Cotality’s research director, described Australia’s housing conditions as “multi-speed,” with Perth and Melbourne at opposite ends of the market.

The Reserve Bank of Australia’s decision to hold the cash rate at 4.35% on 16 June, after three consecutive rises earlier in the year, has kept pressure on mortgage holders and narrowed the room for prices to keep rising. Cotality’s Home Value Index, which measures dwelling values with a hedonic methodology, shows Brisbane median-house buyers needed about A$17,000 more in annual income than they did in January to service a typical mortgage, and Perth buyers needed about A$16,500 more. Sydney buyers needed A$70,000 more in annual household income than Melbourne buyers.

Homeowners who bought at or near the peak face higher repayments just as price momentum fades. Investors are facing softer sentiment and a tax clampdown on investment properties that has rattled demand. Developers are confronting a market in which presales are harder to secure, while first-time buyers are getting some relief from slower price growth without a matching improvement in borrowing capacity.

Many economists expect housing conditions to stay soft in the months ahead because of interest rates, weak sentiment and tax policy changes.