SYDNEY, NSW – 27 Aug, 2026 – Australia’s housing market remains firmly in a soft patch as we move through late winter into early spring 2026. Fresh data confirms that the adjustment underway since the March peak has broadened and deepened, with national dwelling values posting their largest monthly decline in more than three years, advertised stock continuing to build, and auction clearance rates stubbornly subdued across the major capitals.
Cotality’s Home Value Index (formerly CoreLogic) recorded a 0.7% fall in national dwelling values in July — the sharpest monthly drop since December 2022. Values were down 1.9% over the quarter, although they remained 5.3% higher over the year, leaving the national median at approximately $928,421. Combined capital city values fell 0.9% for the month.
Sydney and Melbourne continue to lead the decline. Sydney values dropped 1.4% in July (down 4.0% over the quarter and now 2.0% lower annually), sitting roughly 5.3% below their January 2026 peak. Melbourne recorded a 1.2% monthly fall and is 3.4% lower over the quarter, with annual growth at –2.8% and values still well below the March 2022 high. The softness has spread: Brisbane eased 0.6%, Adelaide 0.2%, while Perth managed a marginal 0.1% gain (after a revised weaker June reading). Combined regional markets, long the outperformers, slipped 0.2% — their first monthly decline since early 2023 — though annual growth remains stronger at around 9.7%.
PropTrack’s July Home Price Index painted a similar picture, with national prices down 0.3% (median around $894,000) and capital cities the main drag. Houses generally underperformed units over the month.
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Listings climb as supply-side pressure builds
Total advertised stock has risen meaningfully. SQM Research reported national property listings jumped 12.4% month-on-month in July to nearly 279,000 dwellings — 22.8% higher than a year earlier, the strongest annual increase in available housing stock in over a year. Both new and older listings contributed, with distressed listings also edging higher. Capital-city asking prices softened around 1.2% over the month.
Cotality data shows total listings across the combined capitals running above five-year averages (around 5.7% higher in late July), even as the flow of new listings has eased in recent weeks as some potential sellers pull back in the face of weaker conditions. The net result is more choice for buyers and longer selling times. Median days on market have stretched, and vendor discounting has widened in many markets.
Auction clearance rates remain soft
Clearance rates across the combined capitals have hovered in the mid-to-high 40s for much of the recent period — well below the 65–70% levels of a year ago. Weekly results have fluctuated (occasional lifts into the low 50s on preliminary reads), but final rates have frequently finished below 50%, with volumes also lower year-on-year. Sydney and Melbourne continue to dominate the auction calendar yet routinely clear in the 40–50% range; Brisbane has been particularly weak at times. This points to a persistent mismatch between vendor expectations and buyer willingness to pay at the asking level. Many sales are occurring below guide or reserve, especially in the larger eastern capitals.
Units and more affordable segments show relative resilience
In a higher-rate environment that has constrained borrowing capacity, units and lower-priced segments have generally held up better than houses. PropTrack and other data through mid-2026 showed units recording smaller monthly declines and, in some periods, stronger annual growth than houses, reflecting their lower entry points and ongoing rental demand. Affordable outer and regional markets have also been more resilient than prestige inner-city stock in Sydney and Melbourne. Upper-quartile values have fallen more sharply than lower-quartile ones nationally.
What it means for buyers and sellers
Purchasers currently enjoy greater choice, reduced competition and meaningful negotiation room — particularly in Sydney and Melbourne, where the price adjustment is most advanced and stock levels elevated relative to recent norms. Longer selling campaigns and more properties trading below initial asking prices are the new normal in many suburbs.
For sellers, realistic pricing and strong presentation matter more than ever. Those who adjust expectations early are still achieving sales; those who hold out for last year’s numbers risk extended campaign times or the need for successive price reductions. Private treaty is increasingly preferred over auction in softer conditions.
The soft patch is supply-driven as much as demand-driven: higher listings meet cautious buyers still digesting the cumulative impact of elevated interest rates and cost-of-living pressures. While regional markets and more affordable segments continue to provide relative support, the broadening of price declines into previously stronger capitals signals that the adjustment phase has further to run through the remainder of 2026.
As always, local conditions vary significantly. Buyers and sellers should seek current suburb-level data and professional advice tailored to their circumstances.