The nation’s property market was slowing even before the Reserve Bank’s second interest rate rise started hitting home buyers, new figures show, with thousands of dollars wiped from the value of houses in Sydney and Melbourne.
As the Reserve Bank prepares to inflict the third rate rise this year on mortgage holders and those looking to buy, figures from Cotality show values falling in the nation’s two largest property markets as they are easing in every other capital city.
Through April, house values in Sydney eased by 0.7 per cent to be down 1.2 per cent since the start of the year. Over the past 12 months, they have increased by 4.4 per cent, in line with the city’s inflation rate over the same period.
Sydney’s median house value eased about $7000 to $1.6 million.
Despite the slowdown, Sydney’s total dwelling values have climbed by 21.4 per cent over the past five years.
In Melbourne, house values fell by 0.8 per cent to be down 2.2 per cent since the start of 2026. Over the past year, house values have failed to keep up with inflation, up by 2.5 per cent compared to the city’s consumer price index of 4.6 per cent.
The city’s median house value dropped almost $5000 to $972,000.
Melbourne’s dwelling values have increased by just 5.8 per cent since early 2021, increasing affordability for those looking to get into the market.
Cotality’s research director Tim Lawless said values across the country had lifted by 0.3 per cent through April, the smallest increase since January last year, which was just before the Reserve Bank started cutting official interest rates.
He said Reserve’s back-to-back rate increases, on top of falling demand and a collapse in consumer sentiment, would continue to bite into the property market.
“The housing market was losing momentum from late last year as affordability and serviceability constraints weighed on demand.”
“Now we have the additional downside pressure of higher interest rates, sentiment has fallen off a cliff and rising inflation is set to drive the cost of debt even higher.”
The strongest market through April continued to be Perth, where values jumped by 2.1 per cent to be 25.7 per cent higher over the past 12 months. Perth’s median house value, which matched that of Sydney during the global financial crisis, is now just short of $1.1 million.
In some Perth suburbs, values have climbed by more than 30 per cent over the past year.
Values in Brisbane (up 1.2 per cent), Darwin (1.1 per cent) and Adelaide (1 per cent) all increased. Brisbane’s median value reached $1.2 million while Adelaide joined the $1 million club.
Canberra house values eased by 0.1 per cent last month but are still up by 7 per cent over the past year at $1.05 million.
Lawless said there was a substantial gap in price change between the high end of the market and the entry level. In Sydney, values for the most expensive properties had eased by 3.3 per cent, while at the cheapest end, values had lifted by 3.3 per cent.
Regional values have risen by 4.2 per cent since the start of the year compared to 1.8 per cent among the nation’s capitals.
But Lawless noted that even regional values were starting to slow.
That slowdown could deepen through May, as the Reserve Bank is expected by most economists to lift the official cash rate from 4.1 to 4.35 per cent at its meeting next Monday and Tuesday.
On top of its February and March increases, a further rate rise would lift repayments on a $600,000 mortgage by a cumulative $300 a month.
The ANZ’s head of Australian economics, Adam Boyton, said a rate rise next week was likely given Wednesday’s inflation report, which showed prices up by 4.6 per cent over the past 12 months.
He said the Reserve Bank board was likely to split on whether to lift rates, with the outlook becoming more difficult to navigate given the economic headwinds created by the war against Iran.
“Assuming we see a rate rise next week, our view remains that the cash rate will then stay at 4.35 per cent,” he said.
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Shane Wright is a senior economics correspondent for The Age and The Sydney Morning Herald.Connect via X or email.
