Despite the national housing market exhibiting clear signs of slowing, homeowners across Australia are still benefiting from years of property price increases. Darwin, uniquely, has resisted the wider downturn affecting other capital cities.
For the third consecutive month, house prices declined across the nation, according to the latest PropTrack Home Price Index. In June, Australia’s national home prices saw a 0.3% drop.
The downward trend was primarily driven by capital cities, where prices slipped by 0.4% during the month. In contrast, regional areas have maintained their performance, showing no drop in June.
Nevertheless, the market overall remains 5.8% higher than it was a year ago. Additionally, as investors retreat, first-time homebuyers are making gains, indicating that not everyone is experiencing losses in the current market.
Darwin defies the drops
Sydney and Perth recorded the largest declines last month, with both cities seeing home prices drop by 0.5%. Melbourne and Canberra followed closely with decreases of 0.4% each.
Brisbane, Adelaide and Hobart slipped more modestly, down 0.2 per cent in June.
Darwin, meanwhile, climbed 0.2 per cent — and has become the second-best-performing capital over the past year, behind only Perth.
REA Group senior economist and report author Anne Flaherty said Darwin’s affordability was helping protect it against dips.
“Darwin has been an outperformer over the past 12 months,” Flaherty told SBS News.
“We’re seeing signs that investors are dropping off around other parts of the country, but Darwin may not see the same drop-off, purely because a lot of investors who buy in Darwin are looking to be positively geared — looking for a high rental income relative to a low entry price point.”
The rest of the market is being shaped by two major factors, she said.
“We’ve had three interest rate rises already this year and there is potential for another if inflation stays too high,” she said.
“The other major piece is the federal budget, which has hit buyer confidence. There are increasing nerves.”
The key tax reforms
Under recently-passed reforms, negative gearing will be limited to newly-built residential properties from 1 July 2027, ending the tax concession for investors purchasing established homes.
The government’s bill has also replaced the 50 per cent capital gains tax (CGT) discount for newly purchased investment properties with an inflation-based indexation system, meaning tax would be paid on the real gain rather than a flat 50 per cent discount when assets are sold after at least 12 months.
The package also includes measures to close tax loopholes involving family trusts, including a minimum 30 per cent tax on certain capital gains distributed through trust structures.
Flaherty said those changes will lead to a sharp decline in investor demand during 2026.
While capital city prices have begun to fall, home values in all regional areas have remained at record highs, bar Queensland, with the combined regional median sitting at 9.5 per cent higher compared to a year ago.
“Looking ahead, affordability is likely to remain a key driver of market performance, with the share of buyers looking to purchase in more affordable areas, such as regional markets, expected to increase,” Flaherty said.
“As yet, the full impact of the Budget on investor demand remains to be seen.”
Owners still cash in on property price growth
While the monthly data suggests house prices are falling, a zoom-out shows that sellers are still seeing record profits.
Cotality’s June Pain and Gain report found that while there was no growth nationally in May, 96 per cent of dwelling resales in the March quarter still recorded a nominal profit — the strongest result since 2005 — with a record median gain of $377k, reflecting value built over years rather than current market momentum.
Flaherty said that picture held even at a five-year view: the median home price in Brisbane is up 85 per cent over that period, Perth is up 96 per cent, and Adelaide is up 81 per cent.
“We talk about home prices dropping, but if we look at how much prices have increased over the past year, in a lot of markets around the country, homeowners are sitting on very significant gains,” she added.
“Even if you are experiencing a decline this month in home value, owners in those cities are seeing very significant gains which really make recent price falls marginal.”
Winners and losers
Owner-occupiers and first-home buyers are the clearest winners of 2026’s housing market so far, with cooling investor demand thinning out competition.
“Buyers need to recognise that their power is growing and that gives them space to negotiate,” Flaherty said.
“Properties aren’t selling as quickly as they have been and there’s a mismatch between what buyers are looking to pay and vendors are looking to accept.”
On the other side, the losers are more likely to be people who need to sell this year after buying relatively recently — particularly in cities like Melbourne, where growth has been soft enough that some sellers may not come out ahead.
Looking ahead, declines in house prices are expected to continue through the second half of 2026, Flaherty said.
“But if we do see interest rates reduced in 2027 and start to see the dust settle post-budget and people feeling a little bit more confident, that could lead to a recovery in prices.”
Still, she said it’s important to keep the bigger picture in mind.
“Australia is still a country where we have an undersupply of housing — we’re not going to be turning that around anytime soon.”