ResidentialTaryn ParisMon 01 Jun 26
‘Tough Slog’ for Residential Markets as Momentum Fades
Australia's housing market stalled in May, with the national Home Value Index recording zero growth for the month, as a deepening divide between capital cities signals a broader market turning point, according to the latest data from Cotality.
The flat national result masks sharply diverging conditions across the country.
Sydney and Melbourne continue to lead the downturn, with dwelling values falling 0.9 per cent and 0.8 per cent respectively in May — now sitting 2.1 per cent and 2.9 per cent below their cyclical peaks from November last year.
Canberra also slipped, down 0.2 per cent for the month.
At the other end of the spectrum, Perth and Darwin recorded the strongest monthly gains at 1.5 per cent each, followed by Brisbane and Hobart at 0.9 per cent and Adelaide at 0.5 per cent.
But the heat has returned to a simmer.
Change in Dwelling Values at May 31, 2026
| City | Month | Quarter | Annual | Total return | Median value |
| Sydney | -0.9% | -2.1% | 2.3% | 5.4% | $1,282,020 |
| Melbourne | -0.8% | -2.3% | 0.5% | 3.9% | $812,621 |
| Brisbane | 0.9% | 3.4% | 19.1% | 23.1% | $1,126,149 |
| Adelaide | 0.5% | 2.8% | 12.3% | 16.1% | $950,703 |
| Perth | 1.5% | 4.8% | 25.8% | 30.8% | $1,050,354 |
| Hobart | 0.9% | 2.4% | 9.3% | 14% | $752,398 |
| Darwiin | 1.5% | 5.2% | 20.3% | 27.9% | $634,368 |
| Canberra | -0.2% | -0.5% | 4.3% | 8.6% | $890,555 |
| Combined capitals | -0.1% | 0% | 7.8% | 11.3% | $1,030,973 |
| Combined regional | 0.6% | 2.4% | 11.8% | 16.7% | $771,365 |
| National | 0% | 0.6% | 8.8% | 12.5% | $941,864 |
Source: Cotality
Cotality research director Tim Lawless described the divergence as a defining feature of the current cycle.
“We are continuing to see multi-speed conditions across Australia’s housing sector, with Perth and Melbourne at opposite ends of the spectrum,” Lawless said.
“The past five years have seen these cities diverge sharply, with Perth values up a stunning 91.4 per cent while Melbourne home values are only 3.3 per cent higher since May 2021.”
But Lawless cautioned that the direction of travel was converging even as the pace differed.
“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.”
The slowdown is showing up in transaction volumes too.
Nationally, estimated home sales over the past three months were running 2.2 per cent below 12 months ago, and 4.1 per cent below the five-year average.
Sydney and Melbourne bore the sharpest declines, with sales down 17.0 per cent and 14.2 per cent compared to a year ago.
“These are also the cities where advertised supply has risen to above average levels, providing more choice and better leverage for buyers,” Lawless noted.
Weighted average auction clearance rates across the capitals hovered near 50 per cent through the second half of May — a further sign that conditions are tilting in buyers' favour.
The outlook, according to Cotality, points to further softening — a gradual drift lower rather than a sharp correction, with conditions expected to remain uneven across regions and price points through the rest of 2026.
Oliver Hume Property Group chief economist Matt Bell said the June quarter would be a “tough slog for pretty much every residential market segment across the country.”
“Increasing rates and global uncertainty were buffeted by Federal Budget impacts in May to see the national housing market come to a grinding halt.
“National dwelling price growth was 0 per cent in May. When it comes to trends across capitals, pretty much everything remains the same when it comes to dwelling prices, just lower.
“The only positive development for the residential market over May has been the softening outlook for interest rates.”
