The latest Cotality Housing Chart Pack for July 2026 suggests the Australian property market is cooling rather than falling sharply, with conditions becoming more balanced after several years of strong growth.

Australia's housing market remains resilient, but growth has slowed significantly in 2026. National home values fell 0.7% over the June quarter, the largest three-month decline since early 2023. Annual growth remains positive at 7.3%, although further moderation is expected.

Key trends include:

• Regional areas are outperforming capital cities, with regional property values rising 1.1% over the quarter while combined capital city values fell 1.3%.
• Sydney and Melbourne are the weakest major markets, with both recording price declines over recent months. Sydney values are now 3.7% below their January 2026 peak, while Melbourne remains below its 2022 high.
• Brisbane, Adelaide, Perth and Darwin continue to perform strongly, with values at or near record highs. Perth remains Australia's strongest major capital city market over the past year.

Buyers Have More Choice

Housing supply has improved noticeably during 2026.

• Total listings are up 8.4% from a year ago.
• Homes are taking longer to sell, with the national median selling time increasing to 32 days.
• Buyers are negotiating larger discounts, reflecting a more balanced market.
• Auction clearance rates have fallen from around 66% earlier in the year to the low 40% range, particularly in Sydney and Melbourne.

These trends suggest conditions are becoming less favourable for sellers and more favourable for buyers.

Rental Market Remains Tight

Despite softer property prices, rental markets remain under pressure.

• National rents increased 5.9% over the past year.
• Vacancy rates remain low across most markets.
• Rental yields have improved to around 3.7% nationally as rents continue rising while property prices stabilise.

This is positive news for investors seeking income, although affordability challenges remain for renters.

Interest Rates Continue to Influence Housing

Higher borrowing costs are having a clear impact on property demand.

• Mortgage rates remain above 6% for most borrowers.
• The Reserve Bank's cash rate remains at 4.35%.
• Cotality analysts believe any interest rate cuts are unlikely until well into 2027.

As a result, many households are being more cautious about taking on additional debt, helping to slow property price growth.

What This Means for Investors

For long-term investors, the property market appears to be transitioning from a period of rapid growth to a more sustainable pace. While short-term price growth may remain subdued, strong population growth, tight rental markets and ongoing housing shortages continue to support the long-term outlook for residential property.

Property prices are no longer rising as quickly as they were, buyers have more choice, rental income remains strong, and higher interest rates are helping to cool the market without causing widespread price declines.

Important information

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