Australia's housing downturn deepened in July, with national property prices falling 0.7 percent—the largest single-month decline since December 2022—as weakness spread beyond Sydney and Melbourne into markets that had held firm through earlier rate cycles.
Property data firm Cotality reported the drop, with Brisbane recording a 0.6 percent decline and Adelaide falling 0.2 percent. Both cities posted declines for the second consecutive month, suggesting the softening is no longer concentrated in the two largest capitals.
The shift in Brisbane is the sharpest in recent months. Gerard Burg, Cotality's head of research, said total housing stock available for sale in Brisbane sat 25 percent below its five-year average as recently as February; it now runs approximately 6 percent above that average. That supply reversal has handed buyers more negotiating power and drawn first-home buyers back into a market where, as Melbourne real estate agent Shahid Khan said, there are now "limited buyers" who have grown more confident.
Not all cities moved lower. Perth rose 0.1 percent in July after a revised 0.5 percent contraction in June, and Darwin gained 0.8 percent over the same period.
Three consecutive rate increases this year have pushed the Reserve Bank of Australia's cash rate to 4.35 percent, a level the RBA now considers restrictive. Government changes to negative gearing and capital gains tax rules have added a second layer of drag. ANZ economists Madeline Dunk and Adam Boyton said "restrictive interest rates, recent tax policy changes and global uncertainty have dampened sentiment."
Burg expects further price declines as vendors grow reluctant to accept lower offers, perceiving they "missed the opportunity to sell at the market peak." Listing volumes may shrink as sellers hold back, which could slow—but is unlikely to reverse—the broader price correction.
The path forward hinges on RBA rate decisions, which directly set mortgage borrowing capacity. Softer inflation prints and a cooling housing market reinforce the RBA's restrictive posture. Should inflation continue to undershoot forecasts, the bank could move to cut rates—a shift that would alter the affordability calculus for buyers and sellers alike.
