Ask five people about “the property market” this month and you’ll get five different answers—and most of them will be right.

Perth has hit new record highs. Sydney has barely moved this year. Melbourne has softened. I had a client recently convinced the market was “crashing” because of a headline about Melbourne. Two suburbs over from where she was looking, prices were still climbing.

That’s the thing about national headlines: they’re describing an average of markets moving in completely different directions, which means they’re not really describing anywhere at all.

Here’s a scenario I see constantly at the moment (the details are illustrative, not a specific client, but the shape of it is very real): a couple earning good money, pre-approved eight months ago, sitting on their hands because they read that “the market is falling.”

The problem is they’re judging their decision based on national headlines rather than the market they’re actually buying into. While some cities have softened, many suburbs and growth corridors continue to record solid gains. They’re not really waiting for their market—they’re waiting for headlines about someone else’s.

So let’s look at what’s actually happening, and where.

Nationally, dwelling values have eased over recent months, marking the longest period of consecutive declines since late 2022, according to Cotality’s Home Value Index. That sounds worse than it is. National values remain only modestly below their earlier peak, and over the past five and ten years, growth has been substantial.

This isn’t a market in freefall. It’s a market that ran exceptionally hard for several years and has now shifted into a much slower gear—which, frankly, was overdue.

Three factors are driving that slowdown, and I’d rank them in this order of importance—not necessarily the order they appear in the news.

First, interest rates. Three cash rate increases through early 2026 added a total of 0.75 percentage points, with the Reserve Bank holding the cash rate at 4.35% since May. That has reduced borrowing capacity for many buyers, regardless of how strong demand remains.

Second—and this probably receives less attention than it deserves—the Federal Budget changes to negative gearing and capital gains tax.

For investors purchasing an established residential investment property after 12 May 2026, rental losses will no longer be able to offset salary or wage income from 1 July 2027. Instead, those losses will generally be quarantined to residential property income and future residential capital gains, subject to the legislation.

Existing investment properties remain grandfathered, so these changes don’t affect current owners. However, they’re already beginning to influence the decisions many new investors are making, and I expect their impact to become more noticeable over the next 12 to 18 months.

Third, the market itself has become more balanced. Listings have increased, auction conditions have softened in many areas, and buyers generally have more negotiating power than they did a year ago.

This is where things become particularly interesting.

Around 25 percentage points separates the strongest and weakest-performing capital cities over the past year. That’s not one cooling market—it’s several very different markets moving at very different speeds.

City	Past 12 Months	Where It Sits Now
Perth	+23.9%	New record high
Darwin	+19.8%	New record high
Brisbane	+17.4%	New record high
Adelaide	Positive, easing	Near peak
Canberra	+2.9%	Softening
Sydney	+0.3%	Around 3.7% below its January 2026 peak
Melbourne	-0.9%	Around 4.0% below its 2022 peak
Hobart	Softest capital	Below its 2022 peak, stabilising

Source: Cotality Home Value Index, July 2026.

It doesn’t stop at the city boundary either.

Within Sydney alone, some outer suburban areas continue to outperform while certain premium inner-city suburbs have softened. The same pattern is emerging across many Australian cities.

So when someone says, “Sydney is flat,” there’s often far more happening beneath the surface.

Renters aren’t getting much relief either.

National vacancy rates remain extremely tight, helping keep rental growth elevated. While that supports investor demand, higher borrowing costs mean many new investment properties remain negatively geared. Rental yield still matters, but so does long-term capital growth. I’d be cautious of anyone promoting a strategy based on only one of those factors.

If you already own an investment property, the recent Budget changes generally won’t affect you because of the grandfathering provisions. More importantly, your suburb’s performance is likely to matter far more than the national headlines.

If you’re considering buying a new investment property, make sure you understand exactly how the new tax rules could apply to your situation before signing a contract. And if you’re buying any property, having your finance organised before you start making offers is one of the strongest positions you can be in. In a market where buyers finally have a little more negotiating power, a solid pre-approval can make a real difference.

None of us can say with certainty how the rest of 2026 will unfold.

What I can say is this: opportunities still exist—they just look different from the opportunities that existed a few years ago.

While parts of the established housing market have cooled, we’re seeing increasing interest in new builds, build-to-sell projects, and value-add strategies such as adding a granny flat to improve rental yield or purchasing larger blocks with future subdivision potential.

These strategies don’t rely solely on strong established market growth, which is one reason they’re attracting more attention in the current environment.

We’ll be exploring these approaches in more detail over the coming months.

In the meantime, it’s worth remembering that a buyer’s market works both ways. Yes, buyers often have more room to negotiate—but it’s also an opportunity to consider strategies that may not have been realistic when competition was much stronger.

If you’d like to discuss how today’s market conditions could affect your property plans, get in touch. We’d be happy to help you explore the options that best suit your circumstances.

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