Price Trend Line = Houses v Units 

The graphs above represent a trend line of the median price performance at capital city level. Source = Cotality.  Note the above graphs don’t represent ‘prices’ but show ‘price changes’ over time.

Houses – Perth again led the capital city house markets last month, recording a strong 1.4 percent increase. Darwin followed closely with a 1.6 percent rise, continuing its recent run of solid growth. Brisbane and Hobart both posted healthy gains of 0.8 percent, while Adelaide recorded a more modest increase of 0.5 percent. In contrast, Sydney and Melbourne both moved lower, declining by 1.1 percent and 1.0 percent respectively, while Canberra slipped by 0.2 percent. The past month’s results highlight the ongoing strength of the more affordable capital cities, with Perth, Brisbane, Adelaide and Darwin continuing to attract demand, while Sydney and Melbourne remain under pressure as buyers become increasingly price-sensitive.

Units – Perth continued to lead the unit market last month, recording a strong 1.7 percent increase. Brisbane, Hobart and Darwin also posted solid gains of 1.3 percent, 1.3 percent and 1.2 percent respectively, highlighting ongoing demand across several of the more affordable capital cities. Adelaide recorded a modest rise of 0.4 percent. Sydney and Melbourne remained softer, declining by 0.3 percent and 0.4 percent respectively, while Canberra edged lower by 0.2 percent. Overall, unit markets continued to outperform houses in several capitals, with strong demand and relative affordability supporting growth, while the larger southern capitals experienced more subdued conditions.

FORECAST 

2026 has been fun so far – after three interest rate rises, an on-again off-again ‘war’ in the Middle East resulting in a fuel and fertiliser crisis in Australia, the property market copped a body blow from the May Federal Budget. The three main Budget changes to negative gearing, capital gains tax and ownership structures were a definite surprise and we won’t know the full impacts for another 12 months.

The short-term impact from the Budget announcement was visible on the property frontline – Post Budget Weekend One (16+17 May) – mostly very quiet apart from a few bait priced properties; Weekend Two (23+24 May) – still subdued with market anger directed towards Albo and Chalmers; Weekend Three (30+31 May) – the market looked to be back in action with some agents cautiously reporting we had hit the bottom of the market 🤐.

Where is the market heading ? 

The media is really pumping the ‘declining market’ news, which is great if you’re in a position to purchase property.  If you already own property, the aim would be to hold until the market improves, depending on your property price point because there’s still a lot of capital growth at the lower end of the market.  What we’re seeing is properties priced up to the $1M mark that can achieve good rental returns will continue to be strong (and in many cases be super strong); properties valued between $1M to $2M – could soften unless they’re in coveted locations; properties $2M and over could soften potentially up to 10% - though some could see even larger drops depending on the buyer pool.

It’s true the auction clearance rates looked to be slowing but the rates held firm in the final week of last month.  So, does this mean we have reached the bottom?  I don’t believe we have seen it yet because we will see an increase in properties for sale in Spring 2026 and Summer 2027, as those people who want to leave the market sell before the 1 July 2027 tax changes become effective.  However, it seems sellers are adjusting their expectations which means they’re meeting the market, and as we still have a strong buyer pool this will lead to stronger clearance rates.

The twist will be what happens to interest rates, so make sure you tune in to our next episode of Market Watch where we’ll be speaking to one of Australia’s top finance brokers to gain more insights on where the market will head.

Rents - Houses v Units

Once again, please note the graphs below show ‘price changes’ not actual pricing [ eg – even though Darwin looks to be ‘on top’ this means it’s increasing faster than other locations, not that it’s more expensive.]  Overall rents look to be stabilising, with very minimal change over the past couple of months.  

Vacancy Rate

This data is drawn from SQM Research.  It represents the total vacancy rate in each major city.  A ‘healthy’ rate is around 2.5%. Anything below this means the amount of properties available for rent is not sufficient to meet the amount of people who want to rent in that particular area.  As you can see, all areas of Australia need more rental properties (all areas are under 2%), although supply is getting closer to healthier levels in Melbourne and Canberra. 

Employment 

Employment levels are an important indicator of economic health, and something the RBA monitors closely when deciding what to do with interest rates.  This information should also be monitored by property buyers as a leading indicator of locations to avoid or consider for their next purchase. 

The sweet spot for a good level of unemployment – where there’s enough jobs for those who want them - will hover between 4 and 5% depending on the rate of jobs turning over.

Anything below 4% would be considered to be low unemployment and would suggest a strong jobs market, attracting workers which increases demand for housing and pushes capital growth and rental returns upwards.

Anything in the 4.5% and upwards would reflect high unemployment which will indicate economic struggles, leading to weaker property price growth and eventually declines.

Population Growth 

This graph shows the change in population by State over the last reporting period.  The data includes changes caused by both overseas migration and also where Australians are moving from one state to the other.  Overall Australia had 306,000 migrant arrivals in 2024 -2025, a slight decrease over the previous 2023-2024 year of 400,000.

Building Approvals

The graphs below show the monthly dwellings approved in each State and Australia-wide, and also the percentage change.  In 2024, the Australian Federal Government announced a target of delivering 1,200,000 homes by 2029 and to achieve this we need to build 240,000 dwellings (houses and units) per year.  As you can see, we’re falling drastically behind on this target.

RBA Cash Rate (Interest Rate)

4.35%

Australian Dollar

1 AUD = 0.72 USD

Dwelling Values Trend Line

The graph above shows the price trend line for houses and units combined.  While this information is useful, it’s important to remember to look at pricing at suburb level and review pricing for your specific property type in order to identify opportunities and know what price to offer for your next purchase.

Looking at the combined (houses + units) Dwellings data, Perth and Darwin shared the lead last month, both recording strong 1.5 percent increases in dwelling values. Brisbane and Hobart also delivered solid results, each rising by 0.9 percent, while Adelaide posted a moderate gain of 0.5 percent. In contrast, Sydney and Melbourne recorded declines of 0.9 percent and 0.8 percent respectively, continuing the softer trend evident in recent months, while Canberra eased by 0.2 percent. The results reinforce the growing divergence between the more affordable capital cities and the larger eastern markets, with Perth, Brisbane, Adelaide, Hobart and Darwin continuing to attract buyer demand, while Sydney and Melbourne remain more subdued as affordability pressures weigh on activity.

Of course, in order to be successful, where you buy depends on your personal requirements as well as what’s happening in the market so book in for a Property Clarity Chat if you would like more tailored, personal recommendations.

If you’re looking for a more detailed review of the market, check out the information below.