Property Market Momentum Slows, But Perth Continues to Stand Out
After several years of strong growth our June update shows that Australia’s property market is beginning to cool, with home values flattening in some cities and declining in others.
Higher interest rates, ongoing affordability pressures and uncertainty following the recent Federal Budget have all combined to slow buyer activity. Auction clearance rates have softened and many buyers are taking a more cautious approach.
Proposed tax changes for property investors
If you missed the Federal Budget announcements, the Government has proposed changes that are due to commence from 1 July 2027.
Under the proposed reforms:
- Negative gearing on residential investment properties will be restricted to new builds.
- The current 50% Capital Gains Tax (CGT) discount for individuals, trusts and partnerships will be replaced with cost base indexation and a 30% minimum tax rate on capital gains.
The good news is that the impact on existing investors is expected to be limited.
Properties owned on or before 7.30pm AEST on 12 May 2026 will be exempt from the negative gearing changes. In addition, the revised CGT rules will only apply to any gains accrued after 1 July 2027, meaning previous growth remains under the current rules.
If you’re considering buying an investment property or expanding your portfolio, it’s worth understanding how these proposed changes may affect your plans. That’s something we can help with.
And if you’re thinking about buying over winter, organising your finance early and securing pre-approval can put you in a stronger position when the right property comes along.
Interest rate update
At its latest meeting, the Reserve Bank of Australia (RBA) kept the cash rate unchanged at 4.35%, following three interest rate increases earlier this year.
Inflation is gradually easing, with annual Consumer Price Index (CPI) growth falling to 4.2%, down from 4.6% in March.
However, the RBA’s preferred measure of inflation — underlying inflation — remains at 3.4%, which is still above the Bank’s target range of 2–3%.
RBA Governor Michele Bullock recently acknowledged that while higher interest rates are having the desired effect, many households are still feeling the pressure.
“These increases have been necessary to tighten financial conditions and slow growth in demand in the economy to ensure we get on top of inflation,” she said.
“We have already seen some signs that this tightening has worked, but it will take one to two years for the full effects to flow through the economy.
“Now I recognise this is a difficult time for many households facing cost-of-living pressures, but it is important we bring inflation under control.”
For homeowners feeling the strain of higher repayments, now may be a good time to book in a review your current loan.
At Fox Mortgage Services, we take the legwork out of the process. We compare lenders on your behalf and help you find a loan that aligns with your goals and circumstances. Whether you’re looking to reduce repayments, access equity or restructure your finances, we’re here to help.
The next cash rate decision is due on 11 August, and opinions remain divided on where rates go from here. Some economists believe another increase is possible, while others feel we’ve already reached the peak.
As always, we’ll keep you updated.
Home value movements
National home values were flat in May, suggesting housing market momentum is slowing across much of the country.
Sydney and Melbourne recorded the largest declines, with dwelling values falling 0.9% and 0.8% respectively. Canberra also eased, down 0.2%.
However, several capitals are continuing to record growth, albeit at a slower pace than we’ve seen over the past two years.
Perth remains one of Australia’s strongest markets
Perth once again led the country alongside Darwin, with dwelling values rising 1.5% during May.
While growth has moderated nationally, Perth continues to benefit from several factors:
- Tight housing supply.
- Strong population growth and interstate migration.
- Relative affordability compared to Sydney, Brisbane and Adelaide.
- Continued demand from both owner-occupiers and investors.
Although competition remains strong, buyers are starting to see slightly more choice compared to the extremely tight conditions experienced over the past 18 months.
Areas across Perth’s southern and outer metropolitan corridors continue to attract strong interest, while affordability constraints are pushing more buyers towards units and lower price points.
Cotality Research Director Tim Lawless said the divergence between cities has been a defining feature of the market.
“While the speed of value change remains very different from city to city, the direction is becoming more consistent, with most markets losing momentum as demand-side headwinds intensify,” he said.
Even with values easing in some areas, Perth’s fundamentals remain relatively strong. Recent limited listings and solid population growth are continuing to support prices, although the pace of growth is expected to moderate over time. June has seen an increase in listings according to REIWA’s latest market insights.
Sales activity slows
The cooling in housing demand is also showing up in transaction volumes.
Nationally, estimated home sales over the past three months were:
- 2.2% lower than a year ago.
- 4.1% below the five-year average.
According to Mr Lawless:
“The largest drop in estimated sales can be seen in Sydney and Melbourne, down 17% and 14.2% on levels a year ago.
“These are also the cities where advertised supply has risen to above-average levels, providing more choice and better leverage for buyers.”
Regional markets also experienced slower growth, with combined regional home values rising 0.6% in May — the smallest monthly increase in a year.
Home Value Index
| State | Auctions | Clearance Rate | Private Sales | Monthly Home Value Change |
|---|---|---|---|---|
| VIC | 409 | 51% | 939 | -0.8% |
| NSW | 672 | 42% | 1,006 | -0.9% |
| ACT | 43 | 42% | 88 | -0.2% |
| QLD | 228 | 30% | 781 | 0.9% |
| WA | 19 | 10% | 383 | 1.5% |
| NT | 3 | 67% | 12 | 1.5% |
| TAS | 2 | 50% | 126 | 0.9% |
| SA | 83 | 46% | 190 | 0.5% |
Monthly Home Values as at 31 May 2026.
Auction results, clearance rates and recent sales for the week ending 7 June 2026.
Clearance rates are preliminary and current as at 9:22am, 9 June 2026.
Ready to buy?
Whether you’re purchasing your first home, upgrading to suit a growing family or adding to your investment portfolio, having the right finance strategy in place can make all the difference.
At Fox Mortgage Services, we take the time to understand your goals and explain your options clearly, so you can move forward with confidence.
We’ll assess your borrowing power, compare a range of lenders and help you secure a loan that suits your needs — without you having to do all the running around.
And if the proposed changes to negative gearing and capital gains tax have raised questions, we’re always happy to have a chat and help you understand what they could mean for your situation.
👉 Thinking about buying, investing or refinancing? Get in touch with the team at Fox Mortgage Services and let’s talk through your options.
Additional sources
Cotality Daily Home Value Index: Monthly Values