Property consultancy Cotality reported subdued movement in Australian home prices for May, attributing the stagnation to elevated borrowing costs and new tax measures directed at property investors that have reduced demand in many metropolitan areas.
In its monthly report released Monday, Cotality recorded a 0.9% fall in Sydney prices and a 0.8% decline in Melbourne for May. Perth and Darwin outperformed, each rising 1.5%, while Brisbane and Hobart both increased by 0.9%. Overall, the combined capitals index registered a 0.1% decline for the month.
The Australian government introduced tax reforms aimed at property investors in April, a policy move that has raised concerns about further weakening in the housing sector. Concurrently, the Reserve Bank of Australia has increased interest rates three times so far this year to rein in inflation, a course that has raised borrowing costs for prospective buyers.
Sydney remains one of the least affordable major housing markets, with its median home price close to A$1.3 million, or about $934,000. The city experienced price declines between October 2024 and January 2025, and earlier saw a 12.4% fall in the 12 months to January 2023 as interest rates rose from record lows.
Rental markets continued to show upward pressure. Rents rose 0.6% in May, the same monthly pace recorded in April, though this was a slight deceleration from the 0.7% monthly gains seen in the first three months of 2026. On an annual basis, national rent growth reached 5.9%, marking the largest year-on-year increase since the 12 months ended September 2024.
The data from Cotality highlights a housing market navigating policy changes and higher finance costs, producing divergent outcomes across cities and sustained upward pressure in rents.
Additional context
The report implies that policy and monetary adjustments are influencing buyer behaviour, while rental markets continue to tighten nationally. The mixed city-level performance underscores uneven local dynamics within the broader national trend described by Cotality.