Australia House Prices Slide as Interest Rates and Conflict Bite

Australia's housing market is experiencing a downturn, with median house prices falling across most states since May. The Reserve Bank of Australia's interest rate hikes and the Middle East conflict have contributed to the decline. Brisbane's median price has dropped by around $8,000 to equal its March level of $1.1 million.

Adelaide and Perth's median home prices have each fallen by about $4,000 from their record highs set in May. Sydney, Melbourne, and Canberra's median prices have also decreased, but remain higher than their respective January 2025 levels. Nationally, the median home price has dropped to around $928,000, down from its March peak.

The Reserve Bank has reported that fewer than 1% of borrowers are in negative equity, with home values worth less than their loans. However, housing demand has fallen further since the May federal budget trimmed property investors' tax concessions. NAB reported a 15% fall in home loan applications from the first three months of 2026 to the three months to June.

RBA governor Michele Bullock attributed the slump in house prices and housing demand to falling buyer demand, saying 'I expect that things will settle down.' She noted that interest rates are only 'a bit' restrictive, but expressed hope that a decline in conflict overseas would boost confidence in the market.