After years of relentless growth, Australia’s property market is showing signs of slowing, with home values stalling in some cities and falling in others. 

Rising interest rates have stretched affordability to its limits, and the federal budget’s proposed tax reforms have only added to the uncertainty. The result? Buyers are pulling back, and auction clearance rates are feeling the pressure. 

In case you missed it, the latest federal budget proposed new changes that are set to take effect from 1 July 2027. This will limit negative gearing for residential property investments to new builds and replace the 50% Capital Gains Tax (CGT) discount for individuals, trusts and partnerships with cost base indexation and a 30% minimum tax rate on capital gains.  

The good news for existing investors is that these changes will be limited in their impact. Properties you already owned on or before 7:30pm AEST on 12 May 2026 are exempt from the negative gearing changes. And if you sell a property, the new CGT rules only apply to any profit earned after 1 July 2027. 

If you’re planning an upcoming winter property purchase, we can explain your borrowing capacity and organise pre-approval on your finance.  

Interest rate news 

At its latest meeting, the Reserve Bank of Australia (RBA) left the cash rate on hold at 4.35%, following three consecutive rate hikes so far this year. 

Inflation is easing with Australia’s annual Consumer Price Index (CPI) dropping to 4.2%, which is down from 4.6% in March. 

However, the RBA’s preferred measure of inflation, which is called underlying inflation, still sits at 3.4%. That’s above the 2–3% target band that the RBA needs to hit before it will consider cutting rates. 

RBA governor Michele Bullock recently said higher interest rates were working, but struggling households could face up to two more years of cost-of-living pain. 

“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.” 

If your repayments are starting to feel like a stretch, it’s worth thinking about refinancing sooner rather than later. 

That’s where we come in. We’ll compare the market on your behalf and find a home loan that works for your financial situation and goals. And if you’re a property investor trying to make sense of the federal budget’s changes, we can help you understand what it means for your portfolio. 

The next cash rate decision lands on 11 August. Opinions are divided on what comes next, with some economists predicting more rises ahead, while others believe the peak is already behind us. We’ll keep you updated in the coming months. 

Home value movements 

Australia’s national home values were flat in May, which could be a sign that the housing market is continuing to lose momentum across most of the country. 

Sydney and Melbourne led the declines with dwelling values falling 0.9% and 0.8% respectively. Canberra also slipped, down 0.2% for the month. 

It’s a different story in other capital cities where home values are still rising, just not as fast as before. Perth and Darwin were the standout performers, leading monthly gains at 1.5%. 

Cotality research director Tim Lawless said this level of diversity had been a defining feature of housing conditions over the past five years.  

“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. 

In addition to easing values, the slowdown in housing demand is also clear in lower home sales. 

The estimated number of home sales over the past three months nationally was tracking 2.2% lower compared to a year ago and 4.1% below the five-year average. 

“The largest drop in estimated sales can be seen in Sydney and Melbourne, down 17% and 14.2% on levels a year ago,” said Mr Lawless.  

“These are also the cities where advertised supply has risen to above-average levels, providing more choice and better leverage for buyers.” 

Housing values increased 0.6% across the combined regionals in May – the smallest monthly rise in a year. 

Home Value Index 

All dwellings	Auctions	Clearance rate	Private sale	Monthly home values change
VIC	409	51%	939	-0.8%
NSW	672	42%	1006	-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 figures as of 31 May 2026 

* Australian auction results, clearance rates and recent sales for the week ending 7 June 2026 

* The clearance rate is preliminary and current as of 9.22am 9 June 2026 

Ready to buy? 

Whether you’re buying your first home, upsizing or investing, we’re here to help every step of the way. We can walk you through your borrowing power and match you with the right home loan for your needs. Rather than shopping around yourself, we can do the legwork and help you compare what’s on offer across the market. 

And if the proposed changes to negative gearing and the CGT discount have raised questions for you, don’t hesitate to get in touch. Reach out today and let’s talk through what it could mean for you. 

Additional sources 

Cotality Daily Home Value Index: Monthly Values 

https://www.corelogic.com.au/our-data/auction-results

https://www.realestate.com.au/auction-results