Australia’s housing downturn is underway, but new analysis from Ray White suggests the national decline may be relatively contained.

National house values fell 0.8% in July and 2.0% over the three months to July, according to Cotality. However, they remain 5.7% higher than a year ago.

Ray White chief economist Nerida Conisbee modelled what could happen if prices continued falling at their recent pace of 0.68% per month.

If that continued for another six months, the annual decline would reach about 4.9%. For the fall to reach 7.9% – comparable with the Global Financial Crisis – prices would need to keep declining at the recent pace until April 2027.

Importantly, Conisbee said the current downturn is very different from the GFC, which involved a global credit shock and severe financial-system stress. Today, transaction volumes are exceptionally low, but there is no equivalent shock forcing large numbers of homeowners to sell.

Conisbee also identified several factors that could limit the downturn, including greater interest rate certainty, improving investor returns, high construction costs and the continuing shortage of housing.

So while prices may fall further, the underlying conditions suggest the national downturn could ultimately prove relatively shallow.

Australian housing worth $12.7 trillion

Australia’s residential property market has softened – but its total value remains significantly higher than a year ago.

The combined value of Australia’s 11.4 million residential properties fell 0.3%, or $34.1 billion, during the June quarter to $12.7 trillion, according to the Australian Bureau of Statistics (ABS).

It was the first quarterly fall since September 2022, with the national mean dwelling price declining 0.7% to $1.1 million.

However, the downturn wasn’t universal. Mean prices fell in New South Wales, Victoria and the ACT, but increased in every other state and territory.

And despite the quarterly decline, Australia’s residential property stock is still worth 8.5% more than it was a year ago.

So while the market has cooled, Australian homeowners are collectively sitting on considerably more housing wealth than 12 months earlier.

Disaster repairs add to building cost pressures

Australia isn’t just trying to build more homes. It’s also having to repair hundreds of thousands of homes damaged by extreme weather.

Between January 2022 and June 2026, insurers received more than 400,000 claims for homes needing repair or rebuilding following declared natural disasters, according to the Insurance Council of Australia.

Those claims had a combined insured cost of $11.3 billion. At the same time, Cotality data shows construction costs rose around 30% over the five years to March 2026, compared with a 24% rise in inflation.

Some of the materials commonly needed after storms, hail and cyclones have risen much more sharply:

* Roof tiles = +77%

* Windows = +48%

* Plaster products = +48%

* Plywood and board = +45%

Labour costs have also climbed, including a 50.4% increase for roofers and 46.4% for glaziers.

That matters because insurers and homebuilders are competing for many of the same trades and materials, meaning disaster repairs can put further pressure on already-elevated construction costs – while Australia is also trying to increase housing supply.

If you’ve been expecting Australia’s property market to stall, KPMG’s latest forecasts suggest otherwise.

The firm expects house prices to rise in every capital city during 2027, with Darwin forecast to lead at 4.6%, followed by Sydney, Brisbane and Perth (all 3.6%). Melbourne (3.3%), Canberra (3.0%), Adelaide (2.4%) and Hobart (2.4%) are also all tipped to post gains. 

The key reason? Australia’s housing shortage hasn’t gone away.

KPMG believes higher interest rates and economic uncertainty will take some heat out of the market, but not enough to outweigh Australia’s limited housing supply. 

A slower market isn’t necessarily a weaker one. For buyers, it can mean less competition and more negotiating power. For sellers, realistic expectations become more important than ever.

While the pace of growth may ease, the long-term fundamentals supporting Australian property remain firmly in place.

The $148,000 gap between owner-occupiers and investors

Owner-occupier suburbs have a habit of outperforming investor-heavy ones, and new Cotality research spanning sixteen years shows just how wide that gap can be.

Between 2010 and 2026, units in owner-occupier-heavy areas grew 99% in value, compared to 65% in investor-heavy areas, a gap of 34 percentage points. Applied to the national median unit price of $436,000 in January 2010, that works out to around $148,000.

So why the difference? Investors typically buy for financial return rather than lifestyle, so they respond more strongly to price signals already in motion, often arriving after much of an area’s growth has happened.

Owner-occupiers behave differently. They will often pay a premium of $50,000 or more to be inside a good school zone or near a station, because they use that value every day for years. Investors assess the same property purely on achievable rent.

The result is that owner-occupier areas tend to capture more of each growth cycle, while rental yields constrain investor-heavy areas. The effect is strongest in the unit market (see image). 

What buyer enquiries reveal about market resilience

Prices tell you what has already happened in a market. Buyer enquiries can tell you what’s coming next.

PropTrack’s latest data, covering the year to June 2026, tracks key enquiries per listing, capturing high-intent actions like emailing an agent or downloading a contract, to gauge genuine buyer interest at the suburb level.

According to REA Group senior economist Anne Flaherty, suburbs with the highest enquiry volumes tend to hold their value best, even as broader conditions soften. “Even if we see more buyers are hesitant and more people pull out of buying, you’re still leaving quite a higher number of people, so that maintains competitive conditions in those markets,” she said.

Notably, many of the highest-enquiry suburbs identified in the report are also relatively affordable, spanning western Sydney, southern Brisbane and parts of Perth.

For buyers and investors alike, demand data can be just as telling as price data.

Australia’s housing market has taken its sharpest step back in years. 

 

Cotality’s national Home Value Index fell 0.4% between May and June, the largest monthly decline since December 2022. 

Sydney led the slide, down 1.2% for the month, while Melbourne fell 1.0% and Canberra dropped 0.6%. 

Even the mid-sized capitals are losing steam. Brisbane rose just 0.3% and Perth 0.7%, both a sharp slowdown from the pace of growth recorded earlier in the year. 

Cotality research director Tim Lawless said the market is changing rapidly. 

“Even before interest rates rose by 75 basis points, we were seeing affordability hurdles weighing on buyer demand. Higher cost-of-living pressures, deeply pessimistic sentiment and a further dampening of demand via property taxation changes announced in the federal budget are all contributing to weaker housing conditions,” he said. 

Regional markets are holding up better by comparison, rising 0.3% in June. 

How much do you really need to earn to buy a home?

Three rate rises in 2026 have pushed up more than just monthly repayments. They’ve also lifted the minimum income needed to qualify for a loan in the first place.

New Cotality modelling shows a household now needs to earn at least $178,194 to purchase a median Sydney house, up from $170,166 in January. Brisbane sits at $139,077 and Melbourne at $108,126, the most accessible of the major capitals.

The figures assume a 20% deposit, a 30-year principal and interest loan, borrowing at 6.25%, with a 3 percentage point serviceability buffer applied on top.

For aspiring buyers feeling the squeeze, there are still paths forward. Reducing debt, comparing lenders and broadening the search to include units or regional areas – where income thresholds can be significantly lower – can all help make the numbers work.

No vacancy: Australia’s rental crisis rolls on

If you’re searching for a rental right now, the numbers explain why it feels so hard.

SQM Research data shows Australia’s national vacancy rate held at just 1.2% in May 2026. 

Five capital cities are recording vacancy rates below 1%, led by Darwin at just 0.3%, followed by Perth and Adelaide at 0.7%, Brisbane at 0.9% and Hobart at 0.6%.

To put that in perspective, a balanced rental market typically sits around 3%.

Rents are feeling the pressure too. Annual asking rent growth ranges from 4.5% in Canberra to 14.0% in Darwin, with the national average sitting at 7.8%.

SQM Research managing director Louis Christopher warned that relief is not on the horizon.

“Australia’s rental market remains fundamentally undersupplied. Without a substantial increase in housing construction and rental stock, and/or a meaningful decrease in population growth rates from current levels, affordability pressures are likely to persist through the remainder of 2026 and into 2027.”

Markets shift. Forecasts change. But 20 years of data from the Australian Bureau of Statistics (ABS) has something to say that no economist can argue with.

In March 2006, Brisbane’s median house price was $325,000. By March 2026, it was $1,150,000. Perth went from $370,000 to $1,000,000. Adelaide from $280,000 to $980,000. Sydney from $470,000 to $1,485,000.

Melbourne, often cited as the market that has lost its shine, still went from $330,000 to $850,000 over the same period – a 158% increase.

These are not stories of perfect timing or lucky suburb picks. They’re the result of ordinary people buying homes and holding them through two decades of interest rate cycles, housing downturns and global shocks.

The current environment – rising rates, falling clearance rates and softer conditions in some cities – is part of that same long story, not an exception to it.

The 20-year numbers are a useful reminder of what the end of that story tends to look like.

Listings surge as the market hits a turning point

Something notable happened in May. For the first time in over a year, the number of homes listed for sale nationally is higher than it was 12 months ago.

According to SQM Research, total property listings rose 10.4% in May from April to 258,803 dwellings. New listings are now 12.0% above May 2025 levels, suggesting vendors are returning to the market in meaningful numbers.

But here is the telling part. Five of the eight capital cities – Sydney, Melbourne, Brisbane, Perth and Adelaide – recorded monthly falls in asking prices.

SQM Research managing director Louis Christopher said the combination of rising supply and stalling prices is “usually an early sign that the market is at a turning point.”

For buyers, that means more choice and less urgency. For sellers, pricing realistically matters more than ever.

Brokers now write 8 in every 10 home loans

Mortgage brokers have reached a record 81% share of Australia’s residential home lending market, according to the Mortgage and Finance Association of Australia (MFAA).

That means more than 8 in every 10 new home loans are now written with the help of a broker – a figure that has grown from just 55.3% in 2018.

So what’s driving it?

Well, home lending has become more complex. There are more lenders, more products and more variables to weigh up – particularly as interest rates have moved sharply over the past few years.

Brokers cut through that complexity. They compare options across the market, explain the trade-offs clearly and are bound by a best interests duty that puts the borrower first. They’re not selling one lender’s products – they’re finding the right fit for your circumstances.

As borrowing conditions become more complex, more Australians are recognising that value. 

Worried about property prices falling?

This chart from Cotality is a good reminder that downturns are a normal part of the housing cycle.

Over the past 40 years, Australia’s combined capital city market has experienced 10 separate downturns. The largest declines were 8.2% during the 2017 to 2019 credit tightening period and 8.1% during the 2022 to 2023 rate hiking cycle.

But while those falls grabbed headlines at the time, neither lasted forever.

In fact, today’s median property prices are significantly higher than they were before any of those downturns began.

That highlights one of the key lessons from Australian property history: time in the market matters more than timing.

Short-term movements can be unpredictable, especially when interest rates or economic conditions change quickly. But over longer periods, housing has generally rewarded patience.

That is why many investors take a long-term approach. Rather than reacting to every downturn, they focus on holding quality property through the cycle and allowing time, population growth and supply shortages to do the heavy lifting.

Family support now key to homeownership

Getting into the property market is increasingly becoming a family effort.

According to Compare the Market, 34% of Australians rely on financial support from parents or grandparents when buying a home.

For many, it is not optional. Almost half of respondents said they could not purchase without that help, rising to 61% among current homeowners.

At the same time, there is growing strain on families. Nearly one in three said they will need support but are unsure if their parents can afford it.

Most assistance comes as deposit gifts, followed by guarantor arrangements that help buyers avoid larger upfront costs.

General Manager of Money at Compare the Market, Stephen Zeller said the data shows how affordability challenges are reshaping the path to ownership, with family wealth playing a bigger role than ever. 

“This is why it’s crucial for any prospective buyer to talk to a broker and compare their home loan options. Saving on interest rates or finding a loan-to-value ratio that works for your budget can help reduce costs and reliance on the bank of mum and dad.”

Housing supply lifted before global shock

Australia’s housing supply outlook has taken a hit from global events.

Before the conflict in the Middle East, the National Housing Supply and Affordability Council (NHSAC) expected around 980,000 homes to be delivered by mid 2029 (see image). 

That was 42,000 more than forecast in 2025, driven by stronger approvals and commencements in early 2026.

Construction timelines were also improving, helping projects move faster.

But rising fuel prices and supply chain disruptions are now pushing up construction costs, which could reduce the number of projects that go ahead.

So what needs to happen next? 

NHSAC’s view is that the response needs to focus on keeping supply moving.

That includes improving construction productivity, investing more in social and affordable housing, and continuing planning reforms to bring projects to market faster.

It also highlights the need for coordinated policy and better infrastructure to support new development.

Global events are making the inflation fight more complicated.

Minutes from the Reserve Bank of Australia’s (RBA) March meeting suggest headline inflation could reach around 5% by June if oil remains near US$100 a barrel.

That risk played a key role in the decision to lift the cash rate to 4.1%.

However, the vote was close, with several board members favouring a hold as uncertainty around the global outlook continues to build.

While the RBA cannot directly influence oil prices, it can shape how those costs flow through the economy. Its aim is to limit the flow-on effects, so temporary price spikes do not feed into wages, spending and expectations, which is how inflation becomes more persistent.

Property profits hit new highs

Another quarter, another strong result for property owners.

Cotality’s Pain and Gain report shows 95.9% of resales delivered a profit in the December 2025 quarter, the highest level in more than two decades.

The median gain reached $365,000, as rising home values continued to lift seller outcomes.

Houses are clearly outperforming units, with 98.1% of house resales profitable compared to 91.2% for units. Losses remain more concentrated in certain unit markets.

Regionally, results were even stronger, with 97.6% of resales turning a profit.

These outcomes reflect a mix of rising prices, lower interest rates through 2025 and resilient demand.

Looking ahead, Cotality said some markets may soften as listings rise and price growth eases, particularly in Sydney and Melbourne. But the broader picture remains strong. Over the long term, property has consistently built wealth for most owners, supported by population growth, limited supply and steady demand.

A welcome lift in housing approvals

After a sluggish start to the year, building approvals have picked up.

New data from the Australian Bureau of Statistics shows approvals rose 29.7% in February to 19,022 dwellings, the biggest monthly increase since early 2022.

The rebound was driven by apartments, with approvals for units and townhouses rising 101.2% to 8,922. Detached houses barely shifted, increasing just 0.2%.

That mix reflects the growing role of higher-density housing in addressing supply shortages.

Even so, approvals are still running below the level needed to meet Australia’s housing targets. With interest rates rising and construction challenges ongoing, turning approvals into completed homes remains the bigger hurdle.

The first rung of the property ladder is getting higher, even for buyers targeting the lower end of the market.

Domain’s First Home Buyer Report for 2026 shows repayments on an entry-level house now absorb 48.9% of a young couple’s income across the capitals. That figure has climbed 24% in just five years. Units are less demanding, but still take 30.9% of income.

Saving the deposit is also taking longer. Nationally, it now takes five years to accumulate a 20% deposit for an entry-level house and three years and six months for a unit.

The shift becomes clearer when you compare property prices with wages. Over five years, wages rose 21%. Entry-level houses jumped 68% and units 30%. 

At the same time, demand has continued to run ahead of supply. Limited new housing and tight listings have kept competition firm, particularly at the more affordable end.

Deposit support programs can help some buyers enter the market sooner. However, they do not reduce the share of income required to service a mortgage. And by bringing more buyers into the entry-level segment, they can also lift competition.

This doesn’t mean that homeownership is out of reach, but it does mean careful planning, realistic expectations and the right lending structure matter more than ever.

Brokers now write 76.7% of new home loans

More than three in four Australians are choosing a mortgage broker when taking out a home loan.

Brokers facilitated 76.7% of all new residential home loans in the December 2025 quarter, according to the Mortgage & Finance Association of Australia. That is the highest December quarter result since reporting began in 2013.

In dollar terms, brokers settled $142.20 billion in new loans during the quarter, up 9.2% on the previous quarter and 23.6% higher than a year earlier.

So why are brokers so popular?

Today’s lending market is complex. There are dozens of lenders, hundreds of products and constantly changing policies. A broker compares options across the market and helps borrowers find a loan that genuinely fits their circumstances, not just the headline rate.

That combination of choice, expertise and support is clearly resonating.

Refinancing surges 20% over the past year

More than 640,000 Australians refinanced their mortgage in 2025, according to the latest lending indicators from the Australian Bureau of Statistics.

That’s a 20% increase on the previous year.

As the graph below shows, after a dip in June 2024, refinancing activity has been steadily climbing in both value and number.

Interestingly, internal refinancing led the charge. The value of loans restructured with the same lender jumped 37% over the 2025 calendar year, while the number of those loans rose 26.8%.

That tells an important story. Borrowers are increasingly aware that loyalty does not automatically deliver a competitive rate. As a result, many are renegotiating with their existing lender, while others are moving entirely.

Strong refinancing growth reflects intense competition among lenders. However, making that competition work in your favour is not always straightforward.

This is where a broker can make the process easier. They can assess your borrowing position, compare options across the market and manage the transition if refinancing is worthwhile, helping ensure your loan remains competitive and suited to your circumstances.

The Reserve Bank of Australia is lifting rates to fight inflation, but the biggest source of price pressure is one it cannot easily control, according to Ray White Group chief economist Nerida Conisbee.

Ms Conisbee explains that housing costs are growing about 5.5% annually, outpacing headline inflation. The pressure is coming from strong rental growth and persistently high building costs, both linked to a shortage of housing.

That matters as interest rate rises are a blunt tool in this context. They do not speed up approvals or expand the construction workforce. Instead, they raise financing costs and make new projects harder to deliver, reducing future housing supply.

The rental sector shows how this plays out. As rates rose from 2022, investor lending dropped sharply. Fewer rental properties were added at the same time population growth accelerated. By mid 2024, rents were more than 18% higher nationally, with some cities seeing rises close to 30%.

Ms Conisbee argues this creates a policy mismatch. Rate rises may slow house price growth, but without targeted supply reform, housing-driven inflation is likely to remain stubborn and continue feeding into the broader cost-of-living problem.

Home building approvals fall sharply in December

Australia’s housing pipeline took another hit in December, with total dwelling approvals falling 14.9% from November to 15,542, according to the Australian Bureau of Statistics

The fall was driven by a 29.8% decline in approvals for apartments, townhouses and other non-house dwellings. That came after a big spike in November, highlighting just how volatile the data can be. Detached house approvals rose slightly, up 0.4% for the month.

While monthly swings are common, the bigger concern is the broader trend. Approvals have remained below average for over a year, which points to a weakening pipeline of new housing supply. With population growth still strong, fewer approvals now mean fewer homes built in the future – adding pressure to prices and rents.

Boomers shift out of property as Gen X take charge

The great wealth transfer is well underway, with Baby Boomers reducing their exposure to property while Gen X build their asset base.

New research from KPMG shows Gen X now hold the most wealth in property and shares of any generation, with an average of $1.445 million in dwellings and land. That compares to $1.360 million for Boomers, who are increasingly moving wealth into more liquid assets such as cash and super.

In net terms, Boomers are still ahead, with a $2.46 million average household net worth. Gen X aren’t far behind at almost $2.2 million. But Millennials face a much steeper climb, with an average net worth of just $905,000. Their average property holding is $890,000 – and in many cases, debt outweighs equity – highlighting the impact of larger mortgages and fewer years in the market.

Encouragingly, younger Australians have seen the biggest wealth growth over the past five years. However, that’s largely due to first home purchases during the low-rate window of 2020–21. And with rates higher and deposits now harder to save, the next wave of buyers will likely find the climb more difficult.

 

Three capital cities dominated the property market in 2025.

Darwin (18.9%), Perth (15.9%) and Brisbane (14.5%) recorded extraordinary price growth during the year – well above the national median of 8.6%, according to Cotality.

Darwin’s surge is a relatively new one – the city’s median price barely moved in 2024 and has increased 38.3% over the past five years.

By contrast, Perth and Brisbane have been running hot for much of that period, with prices up 89.0% and 86.7% respectively.

Most commentators expect home values to continue rising in 2026, although the pace of growth is likely to depend heavily on interest rate movements and borrowing conditions.

Property sellers post record profits

How much has owning a home really paid off for Australians? New Cotality data provides a clear answer.

In the September 2025 quarter, Australians who sold their home for more than the original purchase price recorded a median gain of $335,000 – the highest profit on record. By contrast, those who sold at a loss recorded a median loss of $44,000.

One of the clearest patterns in the data is the link between time in the market and outcomes. Sellers who held their property for less than two years made a median profit of $132,000. That figure rose to $361,500 for those who held for up to 10 years, $496,750 for up to 20 years and $843,000 for sellers who held their property for more than 30 years.

Overall, 95.5% of vendors sold for a profit, while 4.5% made a loss.

While individual results always vary by location and timing, the data highlights that property tends to reward patience, long-term thinking and sensible financing structures.

Population set to climb past 31 million

The federal government expects Australia’s population to reach 31.5 million by 2035–36, up from 27.5 million today, according to the 2025 Population Statement.

That’s despite a projected slowdown in annual growth to 1.3% in 2025–26, as net overseas migration normalises.

Even at that rate, more than 330,000 people will be added each year – a figure well above current levels of home building.

This gap continues to place upward pressure on rents and prices, particularly in cities with strong population inflows like Perth, Brisbane and Melbourne.

Unless construction activity lifts significantly, the gap between housing supply and demand will keep widening – making affordability an even bigger challenge over the decade ahead.

SQM Research is forecasting a strong year ahead for the housing market, with interest rate cuts from mid-2026 expected to trigger a new wave of buyer demand. That’s likely to push prices sharply higher in cities where supply remains tight and economic conditions are solid.

In its Boom and Bust Report 2026, SQM tips national home values to rise 6–10%, with several capitals expected to outperform.

Perth is forecast to lead the market, with prices rising 12–16%, followed by Darwin (12–16%), Brisbane (10–15%) and Adelaide (10–14%). Based on current medians, that would push Perth’s median above $1 million and Brisbane’s close to $1.1 million

Even in softer markets like Melbourne, Hobart and Canberra, values are expected to increase between 3% and 7%.

SQM’s base case assumes moderate population growth, a small surplus of completions and one or two interest rate cuts in the second half of the year. But even if cuts are delayed, prices are still forecast to rise across all capitals – with the biggest gains in Brisbane, Perth and Adelaide.

High DTI loans to be capped from February

APRA, the banking regulator, will limit the share of high debt-to-income (DTI) lending from 1 February to keep financial risks in check. Banks will be allowed to write no more than 20% of new loans at a DTI of six or above.

The move reflects concern about rising household debt as the market heats up. Interest rate cuts this year have lifted borrowing capacity and credit growth is running above its long-term average. At the same time, investor lending has surged, with new investor loans growing at about triple the pace of owner-occupier loans.

APRA said high DTI lending is still relatively low overall, but has begun to rise and is increasingly concentrated among investors (see image). In past cycles, this type of borrowing has been linked to easing credit standards and rapid price gains.

The cap will not apply to bridging loans or loans for new builds, to avoid slowing housing supply.

By acting early, APRA hopes to stop household debt from climbing to levels that could weaken financial stability later in the cycle.

Just 12% of homes are affordable for first home buyers

Housing has become significantly less affordable for first home buyers, according to new analysis from KPMG.

Back in 2019–20, buyers earning $150,000 could afford about 30% of the market. Today, a household earning $180,000 can only afford 12%.

That decline has been driven by soaring property prices. Since 2020, the median has jumped 80% in Queensland and South Australia, 75% in Western Australia, 40% in New South Wales and 20% in Victoria.

In South Australia, a quarter of homes are still within reach, but that’s down from 75% just five years ago. In NSW, affordability has flatlined at 5%.

The share of affordable new homes is also shrinking. Only 12% of new housing supply in 2024–25 was priced under $800,000, compared to around 33% in 2022–23.

As affordability falls, many first home buyers are targeting regional areas, smaller apartments or new fringe developments. But competition is tight, and the pool of entry-level stock continues to shrink.