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Australia’s Housing Downturn Deepens as July Prices Fall Nationwide

Higher borrowing costs alongside investor tax reforms have cut buyer demand and are likely to prolong the market correction.

Residential properties stand against the backdrop of the city skyline in Sydney, Australia, July 2, 2026. REUTERS/Hollie Adams/File Photo
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Treasurer Jim Chalmers: “Housing is a long-term investment, and we continue to expect over the course of the coming years that prices will continue to rise, but more modestly than before.”
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Overview

  • Cotality’s July data showed national home prices fell 0.7 percent, the biggest monthly drop since December 2022, marking a fourth straight month of weakness in some measures.
  • Sydney and Melbourne led the falls with the steepest monthly declines and the weakness has now spread to mid-sized capitals including Brisbane and Adelaide.
  • Analysts attribute the slowdown mainly to three Reserve Bank rate rises this year and May Budget changes that limit negative gearing and curb capital gains concessions, which together have reduced borrowing capacity and investor appetite.
  • Market signals point to weaker demand: auction clearance rates have fallen, many potential sellers are withholding listings, and PropTrack and Cotality have revised recent months lower; at the same time rents are rising and vacancy rates remain very low.
  • Economists expect a material correction rather than a crash because unemployment is low and population growth and constrained construction should limit forced sales, though the downturn will have flow-on effects for construction, real‑estate services and consumer confidence.