National home values suffer biggest monthly fall in four years led by Sydney and Melbourne
House values in the nation’s capitals have fallen by the most in almost four years, with sharp falls in Sydney and Melbourne as interest rate adjustments, expensive homes and federal government property tax changes slowed the market.
New figures show the country’s housing market has never been more affordable, while data published by Cotality on Wednesday showed national house values fell by 0.4 per cent in June. This was the largest monthly decline since December 2022.
House values in Sydney alone fell 1.5 per cent in the month, falling 4.2 per cent year-to-date. House values in Melbourne fell a further 1.3 per cent, down 1.2 per cent in the last 12 months.
Some cities continue to grow; House values in Perth rose 0.7 per cent on last year to 23.6 per cent, while in Brisbane house values rose 0.2 per cent to 16.8 per cent higher than in 2025.
The government has come under attack from the Coalition over the strength of the property market; It has faced claims that the budget’s changes to negative gearing and capital gains tax have left some people with so-called “negative equity” (where a person owes more than a property is worth).
Cotality research director Tim Lawless said three factors were weighing on the property market, including the government’s tax changes and the Reserve Bank’s three interest rate increases between February and May.
“Even before interest rates rose 75 basis points, we were seeing purchasing barriers weighing on buyer demand,” he said.
“Higher cost-of-living pressures, deep pessimistic sentiments, and further reductions in demand through property tax changes announced in the federal budget are contributing to weakening housing conditions.”
Total house values have fallen in Sydney (minus 3.2 per cent), Melbourne (minus 2.6 per cent) and Canberra (minus 1.3 per cent) in the last three months. However, there was an increase in all other capital markets, especially Darwin’s 5 percent and Perth’s 2 percent.
House values in Melbourne fell 0.9 per cent year-on-year. There were increases everywhere else, although Sydney (0.3%) and Canberra (2.9%) experienced increases well below the rate of inflation.
Despite the drop in values, the average house value in five capital cities – Sydney ($1.6 million), Brisbane ($1.2 million), Adelaide ($1.01 million), Perth ($1.1 million) and Canberra ($1.04 million) – remains above $1 million.
These higher prices are also reflected in the Housing Industry Association’s latest affordability measurement; By this measure, the country’s real estate market turned out to be the most expensive since it began collecting data in 1994.
According to the association, Sydney remained the lowest-cost capital in the country in the March quarter; home buyers needed 2.1 times the median income to pay a typical mortgage. Typical monthly mortgage repayments have now risen to $6788 per month.
Sydney is now almost matched by Brisbane at 2.1 times the median income. The typical monthly mortgage repayment in Brisbane rose by more than $700 last year to $5822.
Perth is the third cheapest city to pay a mortgage, just ahead of Adelaide, with an average of 1.9 times income. In Melbourne, utility costs fell to an average of 1.53 revenue.
The association said the RBA’s rate rises were a key factor in making homes less affordable. The data is from before the government’s tax changes.
The Central Bank kept interest rates steady at its meeting earlier this month; markets expect interest rates to remain at 4.35 percent until late next year.
Minutes of the June meeting showed the bank was aware that previous rate increases and government tax charges would impact the property market, and noted that if there was a “material weakening” in prices it could slow the economy.
“Members noted that conditions in the housing market have eased more than expected due to recent increases in the cash interest rate, tax changes announced in the Australian government budget and the wider economic environment,” the minutes said.
In parliament, Liberal leader Angus Taylor took aim at the impact of the government’s property tax changes, asking how many first home buyers have fallen into negative equity since the budget was announced.
Finance Minister Jim Chalmers said the Coalition’s questions about policies aimed at making the housing market fairer for all Australians were “becoming increasingly desperate and somewhat pathetic”.
“For the first time in a quarter of a century, they are about to ensure that first home buyers, and particularly young Australians, have fair play in a housing market that has left them out in the cold for far too long,” he said.
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Shane Wright is senior economic correspondent for The Sydney Morning Herald and The Age.Connect with: X or email.
