Overview
- National data published Monday showed UK average house prices fell 0.6% in May, the first monthly decline in 2026, while Australia’s national prices were unchanged in May as Sydney and Melbourne slid 0.9% and 0.8% respectively.
- Market interest rates rose after the Iran war drove up energy costs, prompting lenders to reprice mortgage deals and pushing typical two‑year fixed UK mortgage rates up by about one percentage point since February.
- Domestic policy actions have added pressure: the Reserve Bank of Australia raised its cash rate three times to 4.35% this year and planned investor tax limits have encouraged some selling, and UK landlord reforms have pushed some owners to exit the buy‑to‑let market.
- Leading indicators are mixed across markets as mortgage approvals in the UK jumped to a 15‑month high in April while Australian auction clearance rates hit cyclical lows and investor listings climbed, and rents in Australia rose 0.6% with vacancy rates around 1.5%.
- Forecasters have trimmed their outlooks, with Savills now expecting about a 2% UK price fall in 2026, and near‑term prospects will hinge on how long the Middle East shock lasts and whether swap and mortgage rates stabilise.