Australia's Home Values Post Biggest Monthly Drop Since 2022

Cotality's June Home Value Index shows a 0.4% national fall, with Sydney down 1.2%, as capital city auction clearances collapse below 50%.

Australia's weekend auction floors have been telling this story for weeks, but the numbers now confirm it: the national housing market has shifted into a meaningful downturn. Cotality's national Home Value Index (HVI) fell 0.4% in June — the largest month-on-month decline since December 2022 — and the supporting indicators all point in the same direction. For buyers, sellers, and anyone approaching a refinance decision, this is a market that has pivoted.

The Numbers Behind the June Decline

Sydney did the heaviest lifting on the downside, with home values falling 1.2% over June — the most significant drag on the national result. Melbourne followed at -1.0%, and Canberra (ACT) posted a 0.6% decline. The mid-sized capitals are no longer the growth engines they were just a quarter ago: Adelaide was flat over the month, while Brisbane and Perth managed modest gains of 0.3% and 0.7% respectively. That represents a sharp slowdown from the March quarter, when Brisbane had been rising at an average monthly pace of 1.9% and Perth at 2.5%.

Over the full June quarter, capital city home values dropped 1.3%, led by Sydney at -3.2% and Melbourne at -2.6%. The ACT fell 1.3% over the same period. Property Update, reporting on research by Cotality Research Director Tim Lawless, confirms that the national HVI now appears to have peaked in March, with values down 0.7% from that point — and recent months have prompted downward revisions, with Perth's May index revised 88 basis points lower and Brisbane's 53 basis points lower.

Three other indicators reinforce the direction of travel:

- **Auction clearance rates** have held below 50% across the combined capitals since the last week of May, falling to the low 40% range by late June. A sub-50% result means more properties are passing in than selling under the hammer — a clear shift of leverage to buyers. - **Home sales** across capital cities over the three months to June are estimated to be 16.2% lower than the same period last year and 14.5% below the five-year average. - **Advertised listings** are running almost 11% above year-ago levels. The higher stock reflects homes sitting on the market longer as demand softens, not a rush to sell.

The Westpac-Melbourne Institute Consumer Sentiment Index fell a further 2.9% in June, with households reporting renewed pressure on finances and worsening expectations for house prices.

Regional Markets Are Still Holding

Not every part of the country is following the capitals lower. Cotality's combined regional index rose 0.3% in June and 1.1% over the June quarter, though the pace is also slowing in regional areas.

Regional Western Australia remains the standout, up 3.7% over the quarter. Regional NSW was flat in June and Regional Victoria edged down 0.1%. For buyers with flexibility on location, genuine relative value persists in regional markets — particularly in tightly supplied parts of WA and Queensland — and the gap between capital city and regional conditions is now wide.

Why Rate Relief Is Still Not in Sight

The RBA held the cash rate steady at 4.35% at its June meeting, providing some breathing space after three rate increases in 2026 that together added 75 basis points. However, Lawless is clear that the case for another hike has not fully disappeared: underlying inflation remains above target and the labour market remains tight, meaning the next few months of data will determine whether the current pause holds.

The federal government's housing tax reforms — targeting investor activity in the established dwelling market — add another headwind, particularly in high-density inner-city markets where investors have historically been most active. Lawless's overall assessment is measured: the most likely trajectory is a further loss of momentum and a gradual drift lower in housing values, "rather than a sharp national correction." But the balance of risks has unambiguously shifted toward weaker conditions.

What Buyers, Sellers, and Refinancers Should Do

**Buying:** Conditions have genuinely improved. More stock and softer clearance rates mean negotiating leverage has moved toward buyers. Use a [repayment calculator](/calculators/repayment) before committing at the top of your budget — serviceability buffers at 4.35% remain significant.

**Selling in Sydney, Melbourne, or the ACT:** Realistic pricing matters more right now than it has in years. Overpriced listings are accumulating unsold. Setting expectations based on March peak values rather than current conditions is the most common and most costly mistake sellers are making.

**Investors:** Tread carefully in Sydney and Melbourne's established inner-ring market. Compare current options on the [investor home loans hub](/home-loans/investor) to understand what competitive investor rates look like before committing.

**Refinancing or approaching a fixed-rate expiry:** This environment rewards action. Use the [refinance savings calculator](/calculators/refinance-savings) to model the gap between your current rate and what is available, and browse the [refinance hub](/home-loans/refinance) for current offers. A [borrowing power calculator](/calculators/borrowing-power) is the logical first step to understanding your position in the current rate environment.

[Source: Property Update, reporting on Cotality Home Value Index research by Tim Lawless, July 2026](https://propertyupdate.com.au/housing-market-downturn-deepens-as-demand-headwinds-build-latest-cotality-home-value-index/)