July 2026 Property Market Update: The Data Got Worse. Has Our View Changed?

Written By Peter Vassilis

Sydney prices are falling, auction clearance rates are soft, and another rate rise is possible. Here is what 40 years of housing data can and cannot tell us.

Author: Peter Vassilis
Reading time: ~8 minutes

Last month, we described this market as a dip rather than a crash. Since then, Sydney dwelling values have fallen further, auction clearance rates have weakened and the prospect of another rate rise has become more live. So, has our view changed? Not fundamentally, but the downside risk has increased. History still gives us good reason not to panic. Shane Oliver's latest rate view gives us another reason not to become complacent. Neither tells us that every city will behave the same way or that today is the bottom. The smarter conclusion is simpler: do not try to call the exact bottom.
Make sure you are prepared for it.

Key takeaways

1.    Sydney dwelling values fell 1.2% in June and 3.2% over the quarter. Domain's Sydney auction clearance rate was 53% for the week ending 25 July, compared with 71% this same time last year. The direction is clear: buyers have more negotiating power.

2.    Cotality has recorded 10 downturns of at least three months in its combined capital cities index over the past 40 years. The largest was an 8.2% peak-to-trough fall between 2017 and 2019.

3.    This national history needs a caveat. Individual cities have experienced deeper and longer declines, including a 15.3% fall across Perth over 61 months after the mining boom. Australia is not one property market. Sydney and Melbourne are falling, while Brisbane and Perth still recorded modest growth in June.

4.    The cash rate remains 4.35%. The June CPI release on 29 July, including new quarterly data, will be central to the RBA's 11 August decision.

5.    AMP Chief Economist Shane Oliver's base case, is similar to many other economists - another rate rise in 2026 is coming, although it remains a close call. That strengthens the case for caution, not for panic.

Our view: it’s not "buy everything because prices are down." It is: understand your position, protect your buffers and be ready to act when the right opportunity fits your strategy.

Last month we called it a dip. The data has since become weaker.

It would be easy to quietly move on from last month's view. We are not going to do that. The latest figures are softer.

Those are not insignificant changes. Affordability has been stretched; three rate rises in 2026 reduced borrowing capacity, and brought confidence to a new low, and more buyers are waiting.

For anyone purchasing, however, the same figures also describe a different set of opportunities. There is more stock to consider, less urgency, and a greater chance of having a genuine negotiation with a vendor. This is a weaker market. It is also a market in which prepared buyers can take their time.

Sydney and Melbourne are leading the downturn, while Brisbane and Perth remained positive in June. Source: Cotality Monthly Housing Chart Pack, July 2026.

What 40 years of housing data actually says

Over the past 40 years, Cotality has helped us understand patterns in recent downturns:

1.    The largest decline was 8.2% between 2017 and 2019, lasting 19 months.

2.    The 2022-23 downturn fell 8.1% over nine months as interest rates rose sharply from pandemic lows.

3.    All but three of the combined-capital downturns lasted less than 12 months.

That is valuable context. Falling prices and weak clearance rates are not, on their own, proof that the market is breaking or crashing. Australia has worked through global shocks, credit tightening and rapid rate rises before.

Cotality also points out that Perth experienced a 61-month downturn after the mining boom, with values falling 15.3% from peak to trough. Darwin's downturn lasted more than 69 months. Individual suburbs and property types can also perform very differently from their city. History can make us calmer. History tells us that downturns end. It does not tell us the exact depth, duration or bottom of this one and it certainly does not make every property a good purchase.

Cotality has recorded 10 combined-capital downturns of at least three months over the past 40 years. The largest decline in that index was 8.2%. Source: Cotality Monthly Housing Chart Pack, May 2026.

Australia is not one market

The national headline can hide more than it reveals. In June:

  • Sydney values fell 1.2%, Melbourne fell 1.0%.

  • Adelaide was unchanged

  • Brisbane rose 0.3%.

  • Perth rose 0.7%.

Domain's FY27 forecast expects this divergence to continue through to June 2027. It forecasts Sydney and Melbourne house prices to fall further. In contrast, Domain expects house-price growth to remain positive in Brisbane, Adelaide and Perth, although at a slower pace.

Domain also expects units to hold up better than houses in most markets as buyers move towards more affordable options.

These are forecasts, not facts. Their real value is not that they predict an exact number. It is that they reinforce the need to stop talking about "the Australian market" as though every city, suburb and property type is moving together.

Rates remain the biggest near-term swing factor

The downswing in property prices is really a consequence of three Reserve Bank of Australia (RBA) rate rises and the budget changes brought by Treasurer Jim Chalmers, with the ban on negative gearing and the changes to capital gains tax.

At 11:30am AEST on Wednesday 29 July, when the Australian Bureau of Statistics (ABS) releases the June CPI (inflation), including new quarterly data, the RBA will have even more data to influence its next decision on what to do with the cash rate, due on Tuesday 11 August.

Financial markets and economic experts remain divided. Strong June employment and renewed pressure from global oil prices argue for caution on inflation. At the same time, weaker consumer demand and falling housing activity show that the existing rate increases are already working.

AMP Chief Economist Shane Oliver is on the more cautious side of that debate. In his 24 July weekly update, he retained an August rate rise as his base case, while describing it as a close call. He said a June trimmed-mean inflation result of around 3.7% or higher would reinforce the case for another increase. He also highlighted renewed oil and petrol price pressure as an added inflation risk.

Oliver's view does not prove that a housing crash is coming. It does strengthen the case for allowing for further price weakness and testing every finance strategy against another rate increase.

That is why we would not build a household strategy around a confident rate prediction. We would model both outcomes:

1.    What happens to your repayments and borrowing capacity if the RBA holds?

2.    What happens if rates rise another 0.25% - or 0.50% over time?

3.    Do you have enough cash buffer after buying costs?

Repayment calculator

What would change our view?

We will keep testing our view against the data. We do not believe good advice means choosing a position and defending it forever.

The warning signs we are watching most closely are:

1.    A material and sustained rise in unemployment.

2.    A sharp increase in mortgage arrears, hardship and forced sales.

3.    A surge in total listings well beyond normal seasonal levels and also in supply of new housing, with population slowing

4.    Inflation remaining high enough to require a longer or more aggressive rate-hiking cycle.

For now, the signals are mixed rather than flashing red. That does not remove the risk. It just means that many factors need to turn red to cause a collapse.

What this means for you

If you are buying

Do not buy simply because the market has fallen. Buy when the right property, price, time horizon and loan structure line up. In a softer market:

1.    Secure or refresh your pre-approval before negotiating.

2.    Set a walk-away price based on comparable sales, not the vendor's expectations.

3.    Keep a genuine cash buffer after stamp duty, legal costs and settlement.

4.    Stress-test the loan at rates above today's level.

5.    Use the extra time to complete building, strata and legal due diligence properly.

You do not need to pick the exact bottom to make a good long-term purchase. You do need to avoid overextending yourself.

If you already have a loan

Uncertainty is a reason to review, not a reason to freeze. Check:

1.    Your current interest rate against the market. We already review & negotiate rates for our existing clients every six months. If your income, expenses, family plans or property strategy have changed, it may be worth bringing that review forward.

2.    Whether your offset and redraw are working the way you expect.

3.    Your repayment buffer under another 0.25% rate increase.

4.    Whether your repayment type still matches your plans.

If you are investing

National averages are especially dangerous for investment decisions. Model the actual property:

1.      Local supply and planned development.

2.      Vacancy rate, realistic rent and holding costs. Perhaps consider buying in more owner-occupier regions that are less susceptible to large swings in the market.

3.      The effect of one more rate rise.

4.      Tax and ownership structure with your accountant or adviser.

5.      A price decline that lasts longer than the forecast and consider speaking to a buyer's agent that’s a local area expert

6.      Your ability to hold the asset without relying on short-term capital growth.

A sound investment should not need a perfect forecast to survive.

Final thoughts

Last month, we said this looked more like a dip than a crash. The July data and the economists’ more cautious interest-rate outlook have tested that view. The honest answer is that the downside risk has increased. We still do not see evidence of a collapse. We do see a genuine downturn in Sydney and Melbourne, significant uncertainty around rates and a much wider gap between strong and weak markets.

So our message is not "buy the dip." It is: do not let a headline decide for you.

Some people should act in this market. Some should wait. Some should use the next few months to strengthen their position. The right answer depends on your objectives, your income, cash buffers, time horizon, property and appetite for risk.

If you want to talk through buying in a softer market, review your current loan before the next RBA decision or simply understand what the data means for you, reach out. We will help you build a strategy that is genuinely in your best interest.

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  • Current data shows a housing downturn, particularly in Sydney and Melbourne, but not a uniform collapse across Australia. Cotality recorded a 0.4% national fall in June, while Brisbane and Perth still grew modestly. Individual cities and suburbs can perform much worse than the national average, so the risks should not be dismissed.

  • Economists forecast Sydney house prices could fall by between 4-9% over the year to June 2027. In some areas, we’ve seen this happen already. This is a forecast rather than a guarantee and outcomes will vary considerably by suburb, price point and property type.

  • The cash rate is currently 4.35%. The RBA has said it could increase rates further if required. The June CPI release on 29 July and other incoming data will be important to its 11 August decision. As at 25 July, market pricing and economist forecasts remained divided. AMP Chief Economist Shane Oliver's base case was an August increase, although he described it as a close call.

  • It can provide less competition and more negotiating power, but it is not automatically the right time for every buyer. Your employment security, cash buffer, borrowing capacity, time horizon and the quality of the property matter more than trying to identify the exact market bottom.

See how our team supports you from assessment to settlement.

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Peter Vassilis
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June 2026 Property Market Update: Not a crash. A dip. What June really means for you.