National Home Values Flatten in May as Market Momentum Continues to Fade

Sydney and Melbourne Lead the Downturn

Sydney and Melbourne recorded the weakest conditions in May, with dwelling values falling 0.9% and 0.8% respectively.

This pushed Sydney values to 2.1% below their November peak, while Melbourne sits 2.9% below its recent cyclical high. The ACT also recorded a decline, with values down 0.2% over the month.

Cotality data suggests these declines reflect ongoing affordability constraints and weakening buyer demand in higher-priced markets, where borrowing capacity pressures are most acute.

Other Capitals Continue to Record Growth as Momentum Slows

Outside the weakest markets, most capitals continued to record growth, although momentum is clearly fading. Perth and Darwin led monthly gains at 1.5%, followed by Brisbane and Hobart at 0.9%, while Adelaide recorded a more modest 0.5% increase.

• Perth: Dwelling values increased by 1.5% in May.

• Darwin: Dwelling values increased by 1.5% in May.

• Brisbane: Dwelling values increased by 0.9% in May.

• Hobart: Dwelling values increased by 0.9% in May.

• Adelaide: Dwelling values increased by 0.5% in May.

Despite continued growth, the pace of expansion across these markets has slowed compared with earlier phases of the cycle, indicating broad-based cooling in market momentum.

Cotality Research Director Tim Lawless noted that conditions remain highly fragmented across Australia’s housing market, with significant divergence between cities and price segments.

Demand Softens as Listings Trend Higher

The easing in price growth has been accompanied by softer demand conditions. Nationally, estimated home sales over the past three months were 2.2% lower than a year earlier and 4.1% below the five-year average.

Sydney and Melbourne recorded the sharpest declines in activity, down 17.0% and 14.2% respectively year-on-year.

At the same time, advertised stock levels are rising, particularly in Sydney and Melbourne, where supply is now above long-term averages, improving buyer choice and negotiating conditions.

Auction clearance rates have also softened, averaging close to 50% through the second half of May.

• National home sales: Down 2.2% year-on-year over the past three months.

• Compared with five-year average: Sales were 4.1% lower.

• Sydney sales activity: Down 17.0% year-on-year.

• Melbourne sales activity: Down 14.2% year-on-year.

• Auction clearance rates: Averaged close to 50% through the second half of May.

Regional Markets Remain More Resilient

Regional markets continued to outperform capital cities in May, although momentum is also easing. The combined regional index rose 0.6%, the smallest increase in a year.

Regional Western Australia led growth at 1.9%, while regional New South Wales recorded the weakest gain at 0.2%.

Across all broad rest-of-state markets, dwelling values remain in positive territory, underscoring the relative resilience of more affordable regional housing markets compared with capital city markets.

Market Outlook

Australia’s housing market is entering a more subdued phase, with growth flattening at a national level and downside pressure building in Sydney and Melbourne.

While other capitals continue to record gains, momentum is weakening across almost all markets as affordability constraints, high interest rates, and softer demand conditions weigh on activity.

The latest results demonstrate that Australia’s housing market can no longer be viewed as a single national cycle. Instead, local economic conditions, housing affordability, supply dynamics, and buyer demographics are playing an increasingly important role in shaping market performance across different regions.

As these factors continue to diverge, market conditions are expected to remain highly fragmented, with performance increasingly determined by geography, price segment, and buyer capacity.