National home prices were mostly flat in May, with price falls in Sydney, Melbourne, Canberra and Perth offsetting modest rises across the rest of the country.
The latest PropTrack Home Price Index showed Australia’s median home price edged slightly lower by 0.04% to $908,000 in May after declining 0.1% in April.
But the median national home value was still 7.5%, or $83,600, higher than it was a year ago.
REA Group senior economist Angus Moore said home price growth was slowing as interest rate rises continued to bite.
"We're seeing a fairly broad-based slowdown in home prices, which is not a surprise given that we've seen three back-to-back rate hikes this year,” Mr Moore said.
"We're probably expecting to see at least one or two more [rate hikes], and that’s clearly weighing on borrowing capacity, willingness to pay, and flowing through into home prices.”
Source: PropTrack.
The Reserve Bank has increased interest rates three times so far in 2026 - wiping out last year’s rate cuts - as economists forecast even more rate hikes for this year.
It's a double-whammy budget hit for households who are also facing a rising cost of living, exacerbated by higher fuel prices.
It's been a turbulent month for buyer momentum, with the federal government announcing plans to slash property investor tax concessions in the May 12 budget. The move is expected to reduce investor activity, particularly for established homes.
The latest results mark the third consecutive month of home price falls in Sydney and Melbourne, although the declines have been modest.
Australia’s median home price declined 0.04% to $908,000 in May. Picture: Getty
In May, the median home prices in Sydney and Melbourne both declined 0.2% to $1.238 million and $846,000, respectively.
Jellis Craig chief executive Andrew McCann said the Melbourne and wider Victorian real estate markets had started the year well, but conditions had softened largely due to rising interest rates.
“We've seen more people choose to sit and hold, and we’ve seen a little bit less activity across the whole market, but I think Melbourne is still a pretty resilient property market,” he said.
“We had a 70% clearance rate from over 100 auctions on the weekend just gone, so we think that sellers are accepting the reality of where today's pricing is, and I think buyers are seeing good value in Melbourne and Victoria.
Jellis Craig chief executive Andrew McCann says Melbourne homeowners are taking advantage of the current market to upgrade. Picture: Supplied
"We see the market as being a good market and an opportunity for people to upgrade, and we're certainly seeing that.
“We think the market will probably serve the same conditions until the end of this year ... but our outlook is for better conditions in the second half of next year.”
Slowdown spreads
The home price slowdown is spreading into other parts of the country too, with Brisbane, Perth and Adelaide also showing signs of slower growth following years of supercharged value growth.
Brisbane’s median home price increased 0.1% last month, while Perth’s home price declined 0.1%.
Adelaide recorded some of the fastest monthly home price growth in May, up 0.3% to $950,000.
Ray White South Australia and Northern Territory chief executive Matt Lindblom said there was strong market confidence in Adelaide and the regional SA property markets.
“Auction clearance rates are higher here than the average across Australia, so there's still confidence in the market,” he said.
Mr Lindblom said population growth, defence investment, infrastructure spending and other factors were underpinning confidence in the state, but noted that there was some caution in the market too.
“We're certainly seeing that there are people who are cautious at the moment,” he said, citing caution around the property investor tax changes in the recent federal budget.
Ray White South Australia and Northern Territory chief executive Matt Lindblom says there is strong market confidence in Adelaide and regional SA. Picture: Supplied
“If people are buying and selling a residential home, they are still transacting like normal.
“It's only really investors that are waiting to see what comes of this, and obviously once legislation has passed through parliament - what it looks like will then determine further activity one way or the other.”
While the Brisbane, Perth and Adelaide markets recorded modest changes in May, they still appear strong on a yearly basis.
Brisbane, Perth and Adelaide’s median home prices were up 16.4%, 20.6% and 13.4%, respectively, during the year to May.
In the other capital cities, Darwin’s median home price also jumped by 0.3% to $622,000 in May.
Hobart’s median home price was up 0.2% to $735,000 in May, while Canberra home prices dipped 0.4% to $869,000.
The median home price across the combined capital cities was 0.1% lower to $1.012 million in May, while home prices across Australia’s combined regional areas was 0.2% higher at $723,000.
Regional South Australia posted the strongest monthly home price growth, jumping 0.7% to $515,000, while home prices throughout regional Northern Territory recorded the weakest regional result, down 0.2% to $353,000.
PropTrack senior economist Angus Moore says home price growth is slowing as interest rate rises continue to bite. Picture: Supplied
Looking ahead, Mr Moore said the broad-based slowdown was likely to continue.
“We probably haven't seen the full effect of those three rate hikes flow through into home prices just yet, and the fact that there's a pretty good chance we'll see at least one more hike will also weigh on home prices,” Mr Moore said.
"We expect to continue to see softer conditions through the back half of this year.
“So I think it’s fair to say we won't be seeing the sort of growth that we saw last year this year.”
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