After years of relentless growth, Australia's property market is showing signs of slowing. Home values have stalled in some cities and softened in others, the federal budget has reshaped the tax treatment of property investment, and buyers are pulling back. June is a useful moment to take stock.
The reassurance to lead with: properties owned on or before 7:30pm AEST on 12 May 2026 are fully grandfathered from the new negative gearing rules, and the new CGT framework only applies to any profit earned after 1 July 2027. The full picture is below.
Rising interest rates have stretched affordability to its limits, and the May Budget's proposed tax reforms have added another layer of uncertainty. The result is a quieter market: buyers stepping back, auction clearance rates under pressure, and vendors with more reason to negotiate. If a winter purchase is on your radar, talking through your borrowing capacity and getting pre-approval lined up early is a useful starting point.
Budget ReformsWhat The May Budget Actually Changed
The federal budget proposed two structural changes set to take effect from 1 July 2027.
First, negative gearing for residential property investments will be limited to new builds. Second, the 50% Capital Gains Tax (CGT) discount for individuals, trusts and partnerships is being replaced with cost base indexation and a 30% minimum tax rate on capital gains.
The good news for existing investors is that the impact is heavily contained. Properties you already owned on or before 7:30pm AEST on 12 May 2026 are exempt from the negative gearing changes. And the new CGT rules only apply to profit earned after 1 July 2027, so the period before then is treated under the existing framework.
For investors weighing up their position before 30 June, the EOFY property investor checklist walks through how the budget changes interact with the rest of the year-end review.
Interest Rate NewsRBA Holds At 4.35%
At its latest meeting, the Reserve Bank of Australia left the cash rate on hold at 4.35%, following three consecutive rises so far this year.
Inflation is easing. Australia's annual Consumer Price Index dropped to 4.2%, down from 4.6% in March. However, the RBA's preferred underlying measure still sits at 3.4%, above the 2 to 3% target band the RBA needs to hit before considering rate cuts.
RBA Governor Michele Bullock recently acknowledged the pressure households are under while reaffirming the case for the current settings.
These increases have been necessary to tighten financial conditions and slow growth in demand to ensure we get on top of inflation. It will take one to two years for the full effects to flow through the economy.
Michele Bullock, RBA GovernorIf your repayments are starting to feel like a stretch, it is worth thinking about whether a review sits earlier on your priority list than it did six months ago. We compare the market on your behalf and look for a structure that matches your situation, not just a sharper headline rate. If you are a property investor trying to make sense of the budget changes, we can talk through what they mean for your specific portfolio.
The next cash rate decision lands on 11 August. Opinions are divided on what comes next, with some economists predicting further rises and others believing the peak is behind us. We will keep you updated through the rest of winter.
Home Value MovementsNational Values Flat, Sydney And Melbourne Soften
Australia's national home values were flat in May, a sign the housing market is continuing to lose momentum across most of the country.
Sydney and Melbourne led the declines, with dwelling values falling 0.9% and 0.8% respectively. Canberra also slipped 0.2% for the month. It is a different story in the other capitals, where home values are still rising but at a slower pace. Perth and Darwin were the standout performers at 1.5%.
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.
Tim Lawless, Cotality Research DirectorThe slowdown also shows up in sales volume. Estimated home sales over the past three months were tracking 2.2% lower than a year ago and 4.1% below the five-year average. Sydney and Melbourne posted the largest declines at 17% and 14.2%, and both are sitting on above-average advertised stock - the kind of conditions that give well-prepared buyers more leverage.
Across the combined regionals, values rose 0.6% in May, the smallest monthly gain in a year.
Home Value IndexState By State
| State | Auctions | Clearance | Private sale | Monthly change |
|---|---|---|---|---|
| VIC | 409 | 51% | 939 | -0.8% |
| NSW | 672 | 42% | 1,006 | -0.9% |
| ACT | 43 | 42% | 88 | -0.2% |
| QLD | 228 | 30% | 781 | 0.9% |
| WA | 19 | 10% | 383 | 1.5% |
| NT | 3 | 67% | 12 | 1.5% |
| TAS | 2 | 50% | 126 | 0.9% |
| SA | 83 | 46% | 190 | 0.5% |
Monthly home values figures as of 31 May 2026. Auction results, clearance rates and recent sales for the week ending 7 June 2026. The clearance rate is preliminary, current as of 9:22 AM, 9 June 2026.
Closing OutReady To Buy?
Whether you are buying your first home, upsizing or investing, the winter market deserves a careful look rather than a fast one. We can walk you through your borrowing power and match you with a structure that fits your goals, rather than just the cheapest rate on a comparison page.
If the proposed changes to negative gearing and the CGT discount have raised questions for you, the answers depend on your circumstances. Reach out and let us talk through what they could mean for you. The strategy hub on things to ask a broker in 2026 is a useful read alongside this newsletter.
