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New figures from property analytics firm Cotality said the national Home Value Index (HVI) recorded its largest month-on-month fall since December 2022, marking a deterioration from May, when values were flat.
Sydney was the biggest drag on the national result, with home values falling 1.2 per cent over the month, followed by Melbourne, down 1.0 per cent. Canberra also declined 0.6 per cent.
While Brisbane and Perth continued to record gains, momentum slowed sharply. Brisbane values rose just 0.3 per cent in June, down from an average monthly increase of 1.9 per cent during the March quarter, while Perth slowed to 0.7 per cent after averaging 2.5 per cent over the same period. Adelaide was unchanged.
Separate data from PropTrack painted a similar picture, with national home prices falling 0.3 per cent in June for a third consecutive monthly decline. Here, capital cities drove the weakness, with every state bar Darwin posting value losses.
Nonetheless, Proptrack recorded a national median value of $903,000 – up 5.8 per cent from a year ago. Cotality’s national median price is now $937,722, up 7.3 per cent from a year ago.
Downturn gathers pace
Cotality also revised recent months’ results lower, with the latest update saying Australia’s housing market peaked in March. National dwelling values have now fallen 0.7 per cent over the June quarter, while capital city values dropped 1.3 per cent.
Sydney led quarterly declines, with values down 3.2 per cent, followed by Melbourne at 2.6 per cent and Canberra at 1.3 per cent.
Cotality research director Tim Lawless said several factors had combined to accelerate the market slowdown.
“Weaker conditions through the second quarter of the year are attributable to an array of downside factors,” Lawless said.
“Even before interest rates rose by 75 basis points, we were seeing affordability hurdles weighing on buyer demand. Higher cost-of-living pressures, deeply pessimistic sentiment and a further dampening of demand via property taxation changes announced in the federal budget are all contributing to weaker housing conditions.”
The softer market is also evident beyond home values.
The combined capital cities’ auction clearance rate has remained below 50 per cent since the final week of May and has slipped into the low-40 per cent range since late June. Meanwhile, estimated capital city home sales over the three months to June were 16.2 per cent lower than a year earlier and 14.5 per cent below the five-year average.
Advertised listings across the capitals are now almost 11 per cent higher than a year ago.
“Such low clearance rates indicate a mismatch between buyer and seller pricing expectations,” Lawless said.
“Buyers now have more stock to choose from and less urgency in their decision making.”
REA Group senior economist Anne Flaherty said affordability pressures remained the dominant influence on buyer behaviour.
“Home prices softened across every capital city in June, bar Darwin, as higher interest rates and cost of living pressures continue to weigh on purchasing power,” Flaherty said.
“The Budget may have also contributed to more cautious decision making among both owner-occupying buyers and investors.”
Regional markets continue to diverge
Despite the weakness across the capitals, regional Australia continued to outperform.
Cotality’s Combined Regional Index rose 0.3 per cent in June and was up 1.1 per cent over the June quarter, although growth has continued to moderate.
Regional Western Australia remained the strongest-performing broad regional market, recording 3.7 per cent growth over the quarter, while regional Victoria was the weakest, slipping 0.1 per cent in June. Regional NSW was flat over the month.
PropTrack’s figures reinforced the trend, with regional home prices holding steady in June, while capital city prices declined 0.4 per cent. Home values also remained at record highs across every regional market except Queensland, with the combined regional median sitting 9.5 per cent higher than a year ago.
Flaherty said affordability would likely continue shaping market performance.
“The strongest performing parts of the market continue to be those offering the greatest affordability,” she said.
“Regional markets outperformed capitals over both the month and the year. Similarly, units have recorded smaller declines over the month compared to houses, and have seen stronger growth over the year.”
Looking ahead, Flaherty said affordability was expected to remain the key driver of housing demand, with more buyers likely to look towards regional markets, while the full impact of the federal budget’s investor tax changes was still yet to emerge.
She said: “As yet, the full impact of the Budget on investor demand remains to be seen. Overall, conditions appear to have improved for first home buyers, who will benefit from lower home prices and less investor competition in 2026.”
[Related: More lenders revise servicing policies after tax reforms pass]
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