Australia's property market is still adjusting to higher interest rates, affordability pressure and a cautious economy. For buyers, that is starting to look less like bad news and more like breathing room.
National property prices fell 0.7% in July, the sharpest monthly decline since December 2022, while the Reserve Bank left the cash rate on hold at 4.35%.
Home values have eased, properties are taking longer to sell and auction activity is subdued. Together that gives buyers more room to negotiate than they have had in years. A recent KPMG report suggests conditions may stay subdued for the rest of 2026, forecasting a 1.1% decline in national house prices before a projected recovery in 2027. Unit markets are expected to hold up better, with prices forecast to keep rising over the next two years.
Investors are also working through a changing rulebook. From 10 August, changes to self-managed super fund borrowing rules added a third clause to the definition of an acquirable asset, which means only property meeting the definition of business real property can be financed through a loan inside an SMSF. Contracts signed before 10 August 2026 remain grandfathered, though there is some uncertainty about how many lenders and products will stay in the space. Residential property can still be purchased outright using the fund's cash reserves. We unpack this alongside the tax changes in what the negative gearing reforms mean for investors.
Interest Rate NewsThe RBA Holds At 4.35%
As widely expected, the Reserve Bank of Australia left the cash rate on hold at 4.35% at its latest meeting. Annual headline inflation rose 3.8% in the 12 months to June, down from 4% in the 12 months to May, while underlying inflation held steady at 3.6%.
The softer-than-expected inflation read has many economists saying the cash rate may have peaked for now. Several expect the RBA to sit still for the rest of 2026, although the timing and direction of the next move remain genuinely uncertain. The next cash rate decision lands on 29 September.
If you have been with the same lender for a while, a loan review can tell you whether your current structure still matches your circumstances. It is also worth checking your offset account is doing its job. ASIC recently highlighted offset account errors affecting some borrowers, and there are three simple ways to check: through your banking app or internet banking, through your statements to confirm the offset balance is reducing the amount used to calculate interest, or by contacting your lender directly. If you are weighing up how to use one, our explainer on offset versus redraw covers the trade-offs.
Home Value MovementsWhere Prices Moved In July
Sydney and Melbourne continue to lead the falls, with prices dropping 1.4% and 1.2% respectively last month, according to Cotality. The downturn has also reached capitals that had been holding firm, with Brisbane down 0.6% and Adelaide down 0.2%.
There's been a really rapid deterioration in conditions in Brisbane, which I think has probably been the most surprising trend that we've seen over the last couple of months.
Gerard Burg, Head of Research, CotalityMr Burg pointed to the jump in listings as the clearest signal. Total stock available for sale in Brisbane sat around 25% below the five-year average back in February and is now roughly 6% above it. He expects values to keep softening while more vendors pull back, choosing to wait for the next cycle rather than sell into a soft market. Regional markets fell 0.2% in July, the first decline in Cotality's Combined Regional Index since January 2023. If you want the fuller picture on how this is playing out under the hammer, we covered what is driving the drop in auction clearance rates.
Home Value IndexState By State
| State | Auctions | Clearance | Private sale | Monthly change |
|---|---|---|---|---|
| VIC | 558 | 57% | 1,131 | -1.2% |
| NSW | 472 | 42% | 1,251 | -1.4% |
| ACT | 34 | 47% | 109 | -1.0% |
| QLD | 187 | 26% | 758 | -0.6% |
| WA | 16 | n/a | 365 | 0.1% |
| NT | 10 | 40% | 13 | 0.8% |
| TAS | 0 | n/a | 128 | 0.1% |
| SA | 82 | 43% | 207 | -0.2% |
Monthly home values figures as of 31 July 2026. Auction results, clearance rates and recent sales for the week ending 9 August 2026. The clearance rate is preliminary, current as of 8:30 AM AEST, 10 August 2026. Sources: Cotality Daily Home Value Index and realestate.com.au auction results.
Closing OutReady To Buy This Spring?
Spring is close, and this year it is likely to bring plenty of motivated sellers. Buyers who are prepared tend to do well in a market like this one, because they can move while others are still working out their numbers. Getting your finance sorted first is the practical starting point, and our guide to what pre-approval actually covers explains what lenders look at before you start inspecting.
It is also worth knowing where you stand on borrowing capacity, because the amount you can borrow may have shifted even if your income has not. If you are choosing who to work with, the strategy hub on things to ask a broker in 2026 is a useful companion to this newsletter.
