Australia’s Real Estate Rollercoaster Ride

Australia’s Real Estate Rollercoaster Ride

Sharp downturn expands: Australia’s Home Value Index fell 0.7% in July (largest drop since Dec 2022), with declines spreading to previously resilient capitals like Brisbane (-0.6%) and Adelaide (-0.2%).‍

Major markets lead declines: Sydney (-1.4%) and Melbourne (-1.2%) lead national falls, with upper-quartile property values dropping 3.2% over the three months to July.‍

Regional areas weaken: The combined regional index fell 0.2% in July—its first decline since January 2023—led by Regional NSW (-0.4%).‍

Sellers adjust to falling demand: New listings are slowing as vendors wait out weak conditions, though total capital city listings are now 5.7% above the five-year average.

Australia's property downturn gathered sharp momentum in July, with Cotality’s national Home Value Index (HVI) falling 0.7% - the largest single-month decline since December 2022.

The downturn is no longer confined to Sydney and Melbourne, as cumulative demand-side pressures pulled previously resilient mid-sized capitals into negative territory.

Sydney and Melbourne continue to lead the national decline, with home values dropping by 1.4% and 1.2% respectively over the month. Values in Melbourne peaked in November last year, while Sydney reached its highest point in January.

Data from July confirmed that the downturn has extended to previously robust mid-sized markets. Home values in Brisbane and Adelaide fell by 0.6% and 0.2% respectively, with historical revisions indicating this marks the second consecutive month of declines for both cities.

Perth managed a modest 0.1% increase following a revised 0.5% contraction in June. Compared with sizeable increases across the December and March quarters, this broader softening highlights a swift loss of momentum across the board.

The decline in home values remains heavily weighted toward higher-value properties. Upper-quartile home values fell by 3.2% nationally over the three months to July, compared with a 0.3% gain across the lower price tier.

During periods of rapid market transition, the HVI can experience larger revisions, with July data revealing steeper value declines across May and June than initially reported.

Cotality Head of Research Gerard Burg noted that recent revisions reflect how quickly conditions are changing across individual markets.

"These revisions highlight the rapid evolution in the market, particularly across the mid-sized capitals," Mr Burg said. "Perth in particular has seen significant shifts, with June growth revised 120 basis points lower in our latest update, which pulled the once-booming city into negative territory for that month."

Buyer and seller expectations shift to reflect the rapidly evolving market. Demand-side factors, such as affordability and mortgage serviceability constraints evident late last year, the three cash rate hikes this year, higher fuel costs, and deeply pessimistic levels of consumer confidence due to the Iran conflict and the policy changes coming out of the budget, have pulled in the same direction. Sellers have arguably been slower to adjust, but a shift is becoming apparent.

“This adjustment is most evident in our weekly listings data,” said Mr Burg. “We have observed a deterioration in the flow of new listings across the country in recent weeks, led by Sydney, as potential vendors assess a weak market and choose to wait until conditions improve. However, this trend has lagged the decline in demand, as evidenced by total listings numbers that have continued to track higher.”

Nationally, total home listings sat 1.1% below the five-year average over the four weeks ending 26 July, up from 25.9% below average in mid-January. Among the combined capitals, advertised supply is now 5.7% above average.

“There remains a mismatch between the pricing expectations of buyers and sellers,” said Mr Burg. “Capital city auction clearance rates have remained below 50% since late May, although they have moved up from the low 40s range in mid-to-late June.”

While regional markets have consistently outperformed the capital cities since the peaks of October 2025, the demand-driven loss of momentum has also hit these markets. The combined regional index fell by 0.2% in July, the first decline in this measure since January 2023. Regional NSW saw the weakest outcome, with home values dipping 0.4%, followed by regional VIC and regional QLD (both down 0.3%). In contrast, regional SA and regional WA maintained some strength, with values rising by 1.4% and 0.9% in July.

Source: Cotality