Australian House Prices Post Their Steepest Monthly Drop Since 2022

Australian house prices recorded their largest month on month decline since 2022 in June, with Sydney and Melbourne each falling 1 percent over the month. Sydney values are now down 3.2 percent over the quarter, while Melbourne has slipped 2.6 percent over the same period. Brisbane prices were largely flat month on month, though they remain up 17.4 percent over the past year, and analysts have made some of their sharpest downward revisions to price forecasts in Perth and Brisbane.

A market changing quickly

Tim Lawless of property data firm Cotality said "the downward revision reflects a market that is changing rapidly." He added that it is "impossible to segregate the influence of the budget from other factors" behind the slowdown, pointing to a mix of forces at play rather than any single cause.

Rising interest rates, a government crackdown on landlord tax breaks including changes to negative gearing and capital gains tax, high cost of living pressures and a heavily indebted household sector have all been cited as contributors. Weak consumer sentiment and tighter affordability and loan serviceability constraints have further cooled buyer demand.

Auctions slow, rents keep climbing

The pullback is showing up clearly at auction. Clearance rates in Sydney have dropped to their lowest level since April 2020, while Melbourne's have fallen back to levels last seen during pandemic lockdowns. Even as prices soften, renters are not getting relief. The national rental vacancy rate sits at just 1.6 percent, and rents have climbed 5.9 percent nationally, with capital city rents up 217 dollars a week over the past five years.

Treasury has estimated the government's tax reforms will only shave about 2 percent off prices over the coming years, a modest figure against the scale of the recent slowdown. The Prime Minister has said house prices will "continue to grow over time, but at a more sustainable rate."