The news: The property market slumped in May, with no growth nationally and falls in major capital cities, according to Cotality’s home value index.
The numbers: Sydney home values fell 0.9% over the month, pushing values down 2.1% over the quarter. Melbourne values fell 0.8% over the month and 2.3% over the quarter. A decline was also recorded in Canberra, down 0.2% over the month and 0.5% over the quarter.
In Sydney and Melbourne, house values led the slump with units falling slightly less sharply. Canberra house and unit values fell by the same rate.
Price rises were recorded in all other capital cities, led by Darwin and Perth up 1.5% over the month and 5.2% and 4.8% over the quarter respectively. Brisbane and Hobart prices were up 0.9% over the month, and 3.4% and 2.4% over the quarter respectively. Adelaide prices were up 0.5% over the month and 2.8% over the quarter.
All cities’ property values are up on an annual basis, with Melbourne at the bottom of the pack at 0.5%, followed by Sydney at 2.3%, with Perth leading price growth up 25.8%.
On a combined capitals basis, prices fell 0.1% over the month, were flat over the quarter and increased 7,8% on an annual basis.
Regional property values climbed 0.6% over the month, 2.4% over the quarter and 11.8% annually.
Nationally, prices were flat in May, up 0.6% over the quarter and 8.8% annually.
The context: Cotality noted the loss in price growth momentum began before the Middle East crisis and the changes to property taxes unveiled in the 2026 federal budget.
However, these factors are expected to compound the impact over the year ahead.
AMP chief economist Shane Oliver said in a note over the weekend that property price growth nationally is expected to “slow to around flat with prices likely to fall over the year ahead due to poor affordability, RBA rate hikes, reduced investor demand flowing from the winding back of negative gearing and the capital gains tax discount and the hit to confidence from the war”.
On the weekend, auction clearance rates sank to six-year lows with preliminary figures showing fewer than 50% of homes sold under the hammer.
What they said: “While the speed of value change remains very different from city to city, the direction is becoming more consistent, with most markets losing momentum as demand-side headwinds intensify,” Cotality research director Tim Lawless said in a media statement.
“Some cities are now recording falls across the lower quartile, including Sydney and Melbourne’s lower quartile houses, as well as both house and unit values across Canberra’s lower quartile,” Lawless said.
The source: Cotality media release