Australia’s property market softened further in July, with the downturn broadening beyond Sydney and Melbourne to draw in previously resilient capitals. National home values recorded their largest monthly fall since December 2022, as easing inflation and a steady cash rate were offset by weaker consumer sentiment and mounting affordability pressures. Conditions remain uneven, but the momentum that supported the mid-sized capitals through June has clearly faded.

Key Economic Indicators

• Inflation (CPI): 3.5% – Down from 3.8% in June, inflation continued to ease steadily, strengthening the case that the cash rate has peaked.
• Cash Rate: 4.35% – The RBA again held the cash rate steady in July, with markets increasingly viewing further hikes as unlikely.
• Consumer Confidence: ~74 – Sentiment softened from June’s 77.5, remaining weak and volatile amid renewed inflation concerns and global uncertainty.

Auction clearance rates improved in the two largest cities but stayed subdued nationally. By late July, Sydney firmed to 53% (up from 49% in June) and Melbourne recovered to 52% from around 56%, its strongest result in five weeks. Canberra rose to 51% from 48% and Adelaide lifted to 49% from 43%, while Brisbane eased to around 30% from 37%, remaining the weakest major market. Clearance rates have held below 50% nationally since late May, reflecting cautious, price-sensitive buyers and elevated stock levels through the winter season.

Rental conditions remained tight in July, though supply continued to ease modestly. Sydney and Melbourne both edged up to 1.7% from 1.6% in June, while Brisbane held at 0.9% and Adelaide, Perth and Hobart all remained below 1%. The national vacancy rate held steady at 1.3%. Strong population growth and constrained housing supply continue to underpin rental demand, keeping conditions challenging for tenants despite the slight loosening.

The Daily Home Value Index confirmed the downturn is widening. Sydney (−4.0% over the quarter, −2.0% annually) and Melbourne (−3.4% quarterly, −2.8% annually) led the falls and are now in outright annual decline, deepening from June. The mid-sized capitals have lost their momentum: Brisbane slipped to −0.6% for the quarter with annual growth easing to 14.8% (from 17.4% in June), Adelaide held barely positive at +0.1% quarterly and +10.5% annually, and Perth — June’s standout — edged into negative quarterly territory at −0.3%, with annual growth cooling to 20.5% from 23.9%. Across the combined capitals, values fell 2.5% over the quarter.

Overall, Australia’s property market entered a clearer correction phase in July, with values easing across a growing number of cities. While the downturn is broadening, several factors continue to limit the risk of a sharp fall: unemployment remains low, population growth is strong, and vendors are pulling back on new listings, tightening supply. With inflation easing and rate hikes now seen as unlikely, the market is expected to find a floor over the coming months — though performance will remain soft and uneven, with higher-value, investor-heavy markets most exposed through the remainder of 2026.