Australian home prices fell sharply in June as higher borrowing costs and new property tax measures weakened buyer demand.
According to data from Cotality, national home prices declined by 0.4% in June compared with May. This marked the largest monthly fall since December 2022.
Australian Property Prices Remain Higher Over the Year
Despite the monthly decline, Australian home prices were still 7.3% higher compared with a year earlier.
However, revised data showed that national property prices reached their recent peak in March. Prices then fell by 0.7% during the second quarter.
The latest figures suggest that momentum in Australia’s housing market is beginning to slow after several years of strong growth.
Sydney and Melbourne Lead the Decline
Australia’s two largest housing markets recorded the steepest monthly falls.
Sydney home prices dropped by 1.2% in June, while Melbourne prices declined by 1.0%.
Conditions were more stable in several mid-sized capital cities. Adelaide home prices were unchanged, while Brisbane recorded growth of 0.3%.
Perth remained the strongest-performing capital city, with home prices rising by 0.7% during the month.
Australian Home Prices Have Risen Over 30% in Five Years
Although the housing market weakened in June, Australian property prices remain significantly higher than they were several years ago.
National home prices have increased by more than 30% over the past five years.
This rapid growth has made housing affordability a major challenge for many potential buyers.
Higher Interest Rates Weigh on Buyer Demand
Cotality Research Director Tim Lawless said affordability pressures were already reducing housing demand before the latest interest rate increases.
According to Lawless, buyers were struggling with higher property prices even before interest rates rose by a total of 75 basis points.
Rising mortgage costs have since added further pressure on household budgets and reduced the amount many buyers can borrow.
Cost-of-Living Pressures Hurt Housing Sentiment
Lawless also pointed to higher living costs, weaker consumer sentiment and changes to property taxation announced in the federal budget.
Together, these factors have created more difficult conditions across the Australian housing market.
Potential buyers are becoming more cautious, while higher financing costs are making property purchases less affordable.
Reserve Bank Warns Housing Market Could Weaken Further
The Reserve Bank of Australia said the housing market had eased following three interest rate increases introduced since February.
The central bank also expects housing credit growth to slow as borrowing becomes more expensive.
Officials warned that a significant weakening in the housing market remains a risk. A sharper property downturn could affect household wealth and reduce consumer spending.
Housing Market Outlook Remains Uncertain
The June decline suggests that Australia’s property market may face further pressure if interest rates remain high.
Sydney and Melbourne appear particularly vulnerable because of their higher property values and greater affordability challenges.
However, continued price growth in cities such as Perth and Brisbane shows that housing conditions remain uneven across the country.
