iscover 
Figures from data analytics company Cotality showed the national Home Value Index remained unchanged in May, down from the 0.3 per cent rise recorded in April and marking the weakest monthly result of the current housing cycle.
The flat national result was driven by falls in Sydney and Melbourne, where dwelling values declined 0.9 per cent and 0.8 per cent, respectively, over the month. That follows declines of 0.6 per cent across both cities in April.
Sydney home values are now 2.1 per cent below their November 2025 peak, while Melbourne values sit 2.9 per cent below their cyclical high in November 2025 and remain well below their March 2022 peak.
Across the remaining capitals, values continued to rise, although growth has slowed noticeably from earlier in the year. Perth and Darwin led monthly gains at 1.5 per cent, followed by Brisbane and Hobart at 0.9 per cent and Adelaide at 0.5 per cent.
Even Perth’s market, which has led the nation for much of the past two years, has begun to moderate. Monthly growth eased from 2.1 per cent in April to 1.5 per cent in May. In November 2025, growth hit 2.9 per cent.
According to Cotality, median dwelling values now sit at $1.28 million in Sydney, $812,621 in Melbourne, $1.13 million in Brisbane, $950,703 in Adelaide, $1.05 million in Perth, $752,398 in Hobart, $634,368 in Darwin and $890,555 in Canberra.
Across the combined capitals, the median dwelling value is $1.03 million, while the national median sits at $941,864.
PropTrack’s Home Price Index painted a similar picture, with national home prices edging down 0.04 per cent in May after falling 0.1 per cent in April.
Sydney and Melbourne both recorded their third consecutive month of price declines, with values down 0.2 per cent across each city in May, while Perth recorded its first monthly decline since late 2024, slipping 0.1 per cent.
Demand headwinds continue to build
Cotality research director Tim Lawless said despite the changes in the federal budget and the renewed rate cycle, the slowdown in housing conditions had been developing well before the latest period of economic uncertainty.
“This loss of momentum had been building for some time, well before interest rates started to rise, conflict escalated in Iran and taxation changes were announced in the Federal Budget,” he said.
Lawless said most cities had recorded a peak in value growth during spring last year as affordability and borrowing constraints increasingly weighed on housing demand.
“While the speed of value change remains very different from city to city, the direction is becoming more consistent, with most markets losing momentum as demand-side headwinds intensify,” he said.
The softer market conditions are also becoming evident in transaction activity.
Cotality estimates the number of home sales nationally over the three months to May was 2.2 per cent lower than a year earlier and 4.1 per cent below the five-year average.
“The largest drop in estimated sales can be seen in Sydney and Melbourne, down 17.0 per cent and 14.2 per cent on levels a year ago,” Lawless said.
“These are also the cities where advertised supply has risen to above average levels, providing more choice and better leverage for buyers.”
Auction markets have also reflected the weaker conditions.
The combined capitals preliminary clearance rate fell to 54.5 per cent in the week ending 31 May, the lowest reading since April 2020, while auction volumes rose 15.2 per cent week-on-week to 2,681 properties.
Sydney's preliminary clearance rate slipped to 51.8 per cent, its second-weakest result of the year, while Brisbane recorded a clearance rate of 43.3 per cent, its lowest since April 2023. Melbourne's clearance rate eased to 58.1 per cent despite accounting for the largest share of auction activity.
REA Group senior economist and report author Angus Moore said the impact of recent rate increases was becoming increasingly visible in price data.
“Home price growth has clearly stalled as the effects of this year’s consecutive rate hikes flow through,” Moore said.
“The slowdown has been most notable in Sydney and Melbourne, with both cities posting their third consecutive decline in home prices.”
Multi-speed market endures
Despite the broad slowdown, significant differences remain between housing markets across the country.
“We are continuing to see multi-speed conditions across Australia’s housing sector, with Perth and Melbourne at opposite ends of the spectrum,” Lawless said.
“The past five years have seen these cities diverge sharply, with Perth values up a stunning 91.4 per cent while Melbourne home values are only 3.3 per cent higher since May 2021.”
Perth remains Australia’s strongest-performing capital city, with dwelling values rising 1.5 per cent in May, 4.8 per cent over the quarter, and 25.8 per cent annually. However, both Cotality and PropTrack data indicate growth has moderated from the pace recorded through 2025.
PropTrack reported Perth prices slipped 0.1 per cent in May, its first monthly decline since late 2024.
While Sydney and Melbourne continued to lead the downturn, regional Australia remains comparatively resilient.
Cotality’s combined regional index rose 0.6 per cent in May, compared to a 0.1 per cent decline across the combined capitals. Over the three months to May, regional dwelling values climbed 2.4 per cent, while values across the capitals were unchanged.
Even so, momentum is fading outside the major cities. The 0.6 per cent monthly increase was the smallest gain recorded across the combined regional markets in a year, indicating the slowdown in housing demand is becoming more broad-based.
Regional Western Australia led monthly growth at 1.9 per cent, while every broad regional market across the country remained in positive territory.
[Related: ANZ tops majors for monthly business lending growth]
Want to see more stories from trusted news sources?Make Broker Daily a preferred news source on Google.