Property Market Softens as Rate Rises and Tax Changes Bite

National home prices fell 0.3% in June and auction clearance rates hit a six-year low, as rate hikes and budget tax changes reshape borrower demand.

National home prices fell 0.3% in June, with Sydney and Perth recording the steepest monthly declines, according to Australian Broker. The softness reflects the Reserve Bank of Australia's run of cash rate increases earlier in 2026 and the Federal Budget's 12 May decision to wind back negative gearing entitlements for newly purchased established residential properties.

Despite the June pullback, prices remain higher than a year ago in every capital except Melbourne, with national values up 5.8% annually.

MPA Australia reports that a major ASX-listed broker aggregator lodged $28.1 billion in home loans nationally in the three months to 30 June, down from $29.5 billion in the March quarter. David Bailey, chief executive of the aggregator, noted the result was still the group's strongest June quarter on record. "Following the strongest March quarter on record, some easing in June was expected, especially after the Federal Budget announcements on 12 May and during a tightening rate cycle," Bailey said.

How Rate Rises and Tax Changes Are Hitting Investors

The softness is most concentrated in investment lending. Investor volumes fell to an estimated $9.54 billion in the June quarter, down roughly 7.7% from around $10.34 billion in March. Investors' share of total lodgements eased from 35% to 34%.

The Federal Budget's decision to wind back negative gearing entitlements for established residential properties purchased after 12 May has given investors genuine cause to pause. Properties bought before that date retain their grandfathered entitlements, but the new settings have introduced real uncertainty for anyone evaluating a new purchase.

"We believe the fiscal policy changes announced during the quarter will represent a period of readjustment rather than a structural shift in underlying demand," Bailey said. "We have seen patchy investor volumes as the market absorbs the new settings, and the data is consistent with some borrowers pausing or reassessing plans. We view this as transitional, and broker demand has remained resilient."

If you are reviewing your options under the new tax settings, use our borrowing power calculator to model what you can borrow at current rates, and compare available investor home loans to see where lender appetite currently sits.

Auction Clearances at Their Lowest Since 2020

The market cooldown is most visible at auction. Sydney and Melbourne clearance rates have fallen to their lowest levels since 2020, with the national clearance rate sitting below 50% for eight consecutive weeks as of late June, Australian Broker reports.

Senior economist Anne Flaherty attributed June's softness to "the cumulative impact of three interest rate rises and changes to investor tax settings, which have dampened buyer demand across the capitals."

The share of new listings going to auction has retreated from a November peak of almost 45% to just over 30% in June, according to data from Cotality. New listings overall rose 13.3% year-on-year nationally in June, with gains recorded in every capital and across regional areas. National median days on market eased slightly to 36 days, compared with 37 a year ago.

Flaherty noted that the rising supply and falling clearance rates point to "a mismatch between buyer and seller expectations, which could point to further price falls over the coming months." She also flagged that upcoming capital gains tax changes from 1 July 2027 "could also be incentivising more sellers to head to market sooner."

Regional markets have held up better overall, with prices flat over the month and many areas still at record highs. Affordability has clearly been a driver, with unit growth outperforming houses and regional areas outpacing capital cities over the past year. Darwin was the only capital to post a monthly price gain.

What This Means for Buyers, Sellers, and Refinancers

**For buyers:** More stock on the market and a buyer-friendlier auction environment can create real opportunities. With new listings up 13.3% year-on-year, buyers have more choice, and seller expectations appear to be softening in the major capitals. The critical variable remains what you can comfortably borrow under current rate settings.

**For investors:** The pullback appears transitional rather than structural, based on the available data. The negative gearing changes only apply to newly purchased established properties, so reviewing the grandfathering rules for any property you currently hold is worth doing with a broker or adviser.

**For refinancers:** Refinancing activity nudged higher in the June quarter after a slow March, described by Bailey as "potentially signalling the floor in the long-running refinancing downtrend." Non-major lenders also continued to gain share from the major banks across most lending categories — the one exception being first home buyer lending, where the major banks strengthened their grip. That competitive dynamic is worth exploring if you are considering switching. Compare refinance home loans or run the numbers with our refinance savings calculator.

**Geographic picture:** Western Australia was the standout performer, the only state to grow both quarter-on-quarter and year-on-year, driven by its resource-sector economy and a supply-constrained housing market. New South Wales, Victoria and Queensland all recorded softer lodgements than a year earlier.

Ahead of the closely watched August RBA decision, borrowers across all categories benefit from understanding what current rates mean for their repayments and whether a better deal is available. Compare cheapest home loans now to see what is currently on offer.

Source: MPA Australia