Australia’s property downturn accelerated in July, with Cotality’s national Home Value Index (HVI) dropping 0.7% — the steepest monthly decline since December 2022. The weakness is no longer limited to Sydney and Melbourne, as mounting demand-side pressures pushed previously resilient mid-sized capitals into negative territory.

Sydney and Melbourne remain at the forefront of the national downturn, with home values falling 1.4% and 1.2% over the month respectively. Melbourne values peaked in November last year, while Sydney reached its recent high in January.

July data shows the downturn has spread to previously resilient mid-sized markets. Brisbane and Adelaide home values fell 0.6% and 0.2% respectively, marking a second straight month of declines for both, while Perth posted a modest 0.1% rise after a revised 0.5% fall in June. Compared with the strong gains seen in the December and March quarters, the shift points to a rapid loss of momentum. The weakness remains concentrated in higher-value properties, with upper-quartile home values down 3.2% nationally over the three months to July, while the lower price tier edged up 0.3%.

During periods of rapid market change, the HVI can be subject to larger revisions, with July data showing sharper declines across May and June than first reported.

Cotality Head of Research Gerard Burg said the latest revisions highlight how quickly conditions are shifting across local markets.

"These revisions highlight the rapid evolution in the market, particularly across the mid-sized capitals. Perth in particular has seen significant shifts, with June growth revised 120 basis points lower in our latest update, which pulled the once-booming city into negative territory for that month," Mr Burg said.

Buyer and seller expectations are shifting in response to rapidly changing market conditions. Affordability pressures, mortgage serviceability constraints that emerged late last year, three cash rate rises this year, higher fuel costs, and deeply pessimistic consumer sentiment driven by the Iran conflict and budget policy changes have all weighed on demand. Sellers have been slower to respond, but signs of adjustment are beginning to emerge.

“This adjustment is most evident in our weekly listings data. We have observed a deterioration in the flow of new listings across the country in recent weeks, led by Sydney, as potential vendors assess a weak market and choose to wait until conditions improve. However, this trend has lagged the decline in demand, as evidenced by total listings numbers that have continued to track higher,” said Mr Burg.

Nationally, total home listings were 1.1% below the five-year average over the four weeks to 26 July, a marked improvement from 25.9% below average in mid-January. Across the combined capitals, advertised supply is now 5.7% above average.

“There remains a mismatch between the pricing expectations of buyers and sellers. Capital city auction clearance rates have remained below 50% since late May, although they have moved up from the low 40s range in mid-to-late June,” said Mr Burg.

While regional markets have consistently outperformed the capital cities since the peaks of October 2025, the demand-driven loss of momentum has also hit these markets. The combined regional index fell by 0.2% in July, the first decline in this measure since January 2023. Regional NSW saw the weakest outcome, with home values dipping 0.4%, followed by regional VIC and regional QLD (both down 0.3%). In contrast, regional SA and regional WA maintained some strength, with values rising by 1.4% and 0.9% in July.