National home values fell 0.7 per cent in July, the steepest monthly decline since December 2022, according to Cotality's Home Value Index published on Monday. Annual growth has slowed to 5.3 per cent.
The fall is concentrated at the top of the market. Values in the most expensive quarter of Australian housing fell 3.2 per cent nationally over the three months to July. Over the same three months, the cheapest quarter rose 0.3 per cent.
Sydney fell 1.4 per cent over the month and Melbourne 1.2 per cent, the two largest capital city declines. Canberra fell 1.0 per cent, Brisbane 0.6 per cent and Adelaide 0.2 per cent. Perth and Hobart each rose 0.1 per cent. Darwin rose 0.8 per cent and was the strongest capital.
Perth's result reads better than it looks. The 0.1 per cent gain follows a revised 0.5 per cent fall in June, so what had appeared to be the start of a Perth downturn is now a flat two months.
Regional Australia has joined the decline for the first time in more than three years. The combined regional index fell 0.2 per cent in July, its first monthly fall since January 2023. Regional New South Wales fell 0.4 per cent. Regional Victoria and regional Queensland each fell 0.3 per cent. Regional South Australia rose 1.4 per cent and regional Western Australia 0.9 per cent.
Cotality's head of research for Australia, Gerard Burg, attributed part of the shift to supply rather than demand, pointing to a deterioration in the flow of new listings coming to market across the country. Sydney vendors in particular have been holding stock back rather than selling into a falling market.
A falling index is not an affordability improvement. Values are still 5.3 per cent higher than they were a year ago, and the quarterly split shows the correction landing on the most expensive quarter while the cheapest quarter, where first home buyers compete hardest, keeps rising. A household priced out in July 2025 is not priced back in by these numbers.
The settings behind that split have not changed. Investor tax treatment, the rate at which new dwellings are actually completed, and the pace of population growth all feed the same market, and a monthly index moves none of them. On negative gearing the public argument still runs between leaving it alone and abolishing it outright, with a cap at a single investment property sitting between the two and rarely getting a hearing.
The Reserve Bank's Monetary Policy Board meets on 10 and 11 August, with the decision due at 2.30pm AEST on the second day. Listings volumes through August will show whether July was the floor or the first month of a longer slide.
