Sydney and Melbourne Property Values Drop

Reported on June 1, 2026.

Home values did not change in May, with Sydney and Melbourne values dropping.

In short:

Australia's housing market stopped growing in May, with home values not changing after months of slowing growth.

Sydney and Melbourne values fell 0.9% and 0.8% in May.

What's next?

The Reserve Bank may keep interest rates the same, but buyers are still worried about borrowing costs.

Australia's housing market is losing momentum, with home values not changing in May.

Sydney and Melbourne led the drop, with values falling 0.9% and 0.8% in May.

Cotality research director Tim Lawless said the housing market is losing steam.

There are many reasons for the housing market slowdown, including high interest rates and low confidence.

Tim Lawless says the housing market is losing steam due to many pressures at once.

The slowdown is also affecting sales activity, with fewer homes being sold.

The number of home sales is 2.2% lower than last year and 4.1% below the five-year average.

Fewer people are buying homes due to high debt costs and low confidence.

Some people are afraid to buy during a market downturn.

The housing market is uneven.

Perth and Darwin had the strongest monthly gains, with values up 1.5%.

Brisbane, Adelaide, and Hobart also had gains, but at a slower pace.

The median dwelling value is $941,864.

Mid-sized cities are still growing, but at a slower pace.

Regional markets are still strong, with values rising 0.6% in May.

Lower-priced homes are holding up better than higher-priced properties.

However, even affordable segments are starting to fall, including in Sydney, Melbourne, and Canberra.

Regional markets and cheaper homes are still strong, but losing momentum.

AMP chief economist Shane Oliver said the national picture will remain uneven.

Perth will likely hold up well, but Adelaide and Brisbane are slowing down.

Sydney is vulnerable due to poor affordability, and Melbourne has weak momentum and low confidence.

The risk of a deeper property downturn has increased.

The housing market is losing momentum, not crashing.

The Reserve Bank has raised interest rates three times this year.

Annual headline inflation eased to 4.2% in April, but underlying inflation rose to 3.4%.

Policy changes are shifting the outlook, with Treasury estimating a 2% slowdown in house price growth.

Some forecasts are more pessimistic, with Morgan Stanley warning of a 5-10% drop in national prices.

Westpac expects new investor demand to fall by 34% and the number of homes changing hands to drop by 20%.

Prior research shows past housing downturns have been gradual, with combined capital city values falling by no more than 8.2%.

Australian home values are likely to weaken further, but a crash is unlikely.

The market is not expected to drop by 20-30%.

The risk of a deeper downturn has increased, with higher interest rates and weak confidence weighing on the market.

Property prices are expected to fall over the next year, possibly by around 5%.

A housing crash is unlikely unless unemployment rises sharply.

Recent homebuyers may become victims of negative equity.

Some agents in Australia's biggest city are already seeing the shift.

Buyers have become more cautious, with fewer people attending inspections.

The market has already adjusted by about 10% in some areas.

If conditions deteriorate, another 5-10% drop is possible.

Investor pullback is expected due to proposed changes to housing investment tax settings.

Many analysts say the changes will weigh on investor demand.

Treasurer Jim Chalmers introduced legislation to replace the capital gains tax discount with an inflation-based system.

The impact of the budget will become clearer over the coming months.

A sharp pullback in investment activity is expected.

Most property investors have traditionally bought established homes, which may shift towards new builds.

Some investors might switch to newly built homes, but new builds have their own challenges.

New housing construction is very expensive compared to existing property.

Reported on June 1, 2026, at 4:57am.

Reported on June 1, 2026, at 7:35am.

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