How Is the Property Market Performing This Winter?
How Is the Property Market Performing This Winter?
Welcome to June, the first month of winter. Let us explore together, in a simple question-and-answer style, how the property market is performing despite all the changes happening both nationally and internationally. I hope you enjoy reading it.
Q: Are home prices currently falling in Australia?
A: Yes, home prices have recently fallen in Australia’s two largest cities. In May, dwelling values dropped by 0.9% in Sydney and 0.8% in Melbourne, with a smaller decline of 0.2% in the ACT.
Q: Are prices dropping everywhere?
A: No, prices are still rising in some areas, but the growth is slower than previously seen. Perth and Darwin recorded the strongest increases at 1.5%, followed by Brisbane and Hobart (0.9%) and Adelaide (0.5%).
Q: What is causing the weakness in the housing market?
A: Several factors are contributing:
- Affordability pressures, as property prices had been rising faster than incomes
- Rising inflation
- Higher interest rates and a more aggressive stance from the Reserve Bank of Australia, which has impacted buyer confidence
Q: What are the current median home prices?
A: Sydney remains the most expensive city, with a median dwelling price of $1,282,020. Melbourne’s median price is $812,621.
Q: How are regional areas performing?
A: Regional areas are performing better than capital cities. Regional Western Australia led growth with a 1.9% increase in May and a strong annual rise of 22.7%.
Q: What’s happening with rental prices?
A: Rents continue to rise nationally. They increased by 0.6% in May, the same as April, although slightly slower than in the earlier months of 2026.
Q: Why are rents still going up?
A: A very low vacancy rate of 1.5% means demand for rental properties remains high, and supply is limited. This imbalance is expected to keep putting upward pressure on rents.
Q: How are government policy changes affecting the market?
A: The federal government has restricted key investor tax incentives to new homes only. This is expected to reduce investor activity, although the full impact is not yet visible in the data.
Q: What does this mean for the future housing market?
A: Experts expect:
- Reduced investment activity
- A decline in overall property transactions
- Continued softness in parts of the market
Q: Are there any early indicators of future price trends?
A: Yes, auction clearance rates—often seen as a leading indicator—have dropped to a new cyclical low following the recent tax changes, suggesting further market weakness ahead.
Summary:
While home price growth is slowing or declining in major cities, renters continue to face rising costs due to strong demand and limited supply.