Australia's House Price Retreat Gathers Momentum in July

By James Glynn

SYDNEY--Australian house prices continued to slide sharply in July, posting their biggest drop since December 2022 over the month, due to the impact of higher interest rates, the conflict in the Middle East, and recent tax changes impacting property investors.

The national home value index fell 0.7% in July from June, according to property research firm Cotality. Prices are 5.3% down from a year ago.

The housing downturn is no longer confined to Sydney and Melbourne, as cumulative demand-side pressures pulled previously resilient mid-sized capitals into negative territory, the data showed.

Sydney and Melbourne home values dropped by 1.4% and 1.2%, respectively, over the month. Values in Melbourne peaked in November last year, while Sydney reached its highest point in January.

The Reserve Bank of Australia has raised interest rates three times this year so far, with inflation still above levels it targets.

In May, the federal government wound back tax concessions for property investors, arguing that housing affordability has fallen sharply over recent years.

The decline in home values remains heavily weighted toward higher-value properties. Upper-quartile home values fell by 3.2% nationally over the three months to July, compared with a 0.3% gain across the lower price tier, Cotality said.

Cotality's head of research, Gerard Burg, said conditions are changing quickly across individual markets.

Demand-side factors, such as affordability and mortgage serviceability constraints have been evident late last year, he said.

The combination of three cash rate hikes this year, higher fuel costs, and deeply pessimistic levels of consumer confidence due to the Iran conflict and the policy changes coming out of the federal budget, have pulled in the same direction, he added.

"Sellers have arguably been slower to adjust, but a shift is becoming apparent," he added.

Nationally, total home listings sat 1.1% below the five-year average over the four weeks ending July 26, up from 25.9% below average in mid-January. Among the combined capitals, advertised housing supply is now 5.7% above average, the data showed.

-Write to James Glynn at james.glynn@wsj.com

(END) Dow Jones Newswires

August 02, 2026 19:20 ET (23:20 GMT)