Australian Property Prices Are Falling: What the July Numbers Actually Show

What the numbers show

National home values fell 0.4 per cent in June. That was the biggest monthly drop in three and a half years. Over the June quarter, values were down 0.7 per cent.

Sydney had the largest fall, down 1.2 per cent in the month. Melbourne was down 1.0 per cent. Canberra also fell.

July has been steeper. Cotality’s daily index showed values down about 0.9 per cent over the month to 17 July across the five biggest cities. Sydney led that fall at 1.4 per cent. Melbourne was down 1.3 per cent. And the pace of the decline has picked up in every major market except one.

Perth is the exception

Perth is still rising, other places are not. Over the past year, Perth values are up 23.9 per cent. Melbourne is down 0.9 per cent over the same period.

That is a gap of close to 25 percentage points between capital cities in one country.

Right now you have one capital running hard while the two biggest are going backwards. So when you read a headline about national prices falling, remember that the national number is an average of markets doing completely different things.

How far have prices actually fallen?

Some context around this, because falling prices often sound worse than they are.Sydney is now about 3.7 per cent below its January 2026 peak. Melbourne is about 4.0 per cent below its high from March 2022.

For comparison, the biggest peak to trough fall across the combined capitals in the last 40 years was 8.2 per cent. So this is real. But it is not a crash. 

Why it is happening

Cotality points to three things hitting demand at the same time.

The first is interest rates. The Reserve Bank has raised rates three times this year. That makes borrowing more expensive and cuts how much people can spend.

The second is cost of living. Households have less confidence to make a big financial decision when everything else is getting more expensive.

The third is the tax changes. Investors are expected to pull back once the negative gearing and capital gains tax changes take effect. Those together get less demand. Less demand means softer prices.

The government says this is the plan

Housing Minister Clare O’Neil has said the tax changes are working as intended. The government forecast that its reforms would slow house price growth by around 2 per cent, while helping more first home buyers win at auctions. So the softening is not an accident. It is at least partly the point.

Whether that is good policy or not is a seperate issue. But if you are waiting for someone to step in and prop prices back up, that is not the direction things are heading.

What this means if you are buying

A softer market is not bad news for a buyer. It is usually the opposite. Vendors are discounting again. The median discount across the combined capitals has risen to 3.6 per cent. That means sellers are accepting less than they first asked.

There is also more choice. Total listings are up 7.7 per cent on a year ago, sitting at just over 131,000. At the same time, new listings are running 6.2 per cent below the five year average.

More stock sitting on the market. Fewer new listings coming in. Weaker competition from other buyers. That is a better set of conditions for a buyer than we have had in a while.

It does not mean everything is cheap. It means you have more room to negotiate, more time to do your checks, and less pressure to rush.

What this means if you already own

If you are holding a quality property in a good location, a few months of softer numbers does not change much.

Prices move in cycles. They always have. A 3 or 4 per cent dip from a peak is not the thing that decides whether a property was a good buy. What decides that is whether the asset was right in the first place, and whether you can hold it.

The people who get affected in a soft market are usually the ones who have to sell. Not the ones who can wait.

What I would focus on

If I was speaking with a buyer today, I would not be watching the monthly national figure. I would look at the actual property and the actual suburb. The questions are the same ones they always are:

• Is this a quality asset in a genuinely undersupplied location 
• Is there real demand from buyers and renters in that area 
• Do you know what it is worth, separate from what the seller is asking 
• Can you hold it comfortably if conditions stay soft for a while
• Because a national average tells you nothing about the street you are buying on.

Final word

Prices are falling in most capitals. Perth is the exception. The falls have become steeper through July, and the reasons behind them are not going away quickly. But a falling market and a bad market isn’t the same.

Know the difference between the national number and your local market. Understand that discounts and more listings work in a buyer’s favour. Do not rush, and do not panic. And keep your focus on the property itself, not the monthly headline.

Because the buyers who do well in a soft market are the ones who did the work before they made an offer. That has not changed.