Australia's national Home Value Index fell −0.7% in July — the largest single-month decline since December 2022, and confirmation that the downturn is broadening rather than fading. Last month six of eight capital cities were still rising. This month the picture flipped: five of eight capitals fell, and for the first time this cycle the drop pulled in previously resilient mid-sized markets — Brisbane and Adelaide both went negative.
The big picture in two minutes
Keep it in perspective: this is monthly momentum turning negative while annual growth is still positive and unwinding from a high base. This is a market coming off the boil, not one in free fall. And put that −0.7% in real money — on a typical $928k home that's about $6,500 off in a single month. Real, but hardly the roof caving in.
- National home value growth: −0.7% (steepest monthly fall since Dec 2022)
- Annual change: +5.3% (down from +7.3% last month)
- National median value: $928,421 (down from $937,722 last month)
- Combined capitals: −0.9% (quarter −2.5%)
- Combined regionals: −0.2% (first negative print since Jan 2023)
A month ago only two cities were falling. Now it's five — Brisbane and Adelaide have joined for the first time. But it's still an orderly downturn: more stock on the market and wider seller discounts. Buyer leverage has widened from two cities to nearly all of them — the opportunity for a prepared buyer, the warning for a stretched one.
Capital city performance — July 2026
How the eight capital markets stacked up over the past month and year (median values rounded):
- Darwin: +0.8% monthly · +16.3% annual · median $642,175 · +$5k this month
- Perth: +0.1% · +20.5% · $1,029,797 · +$1k
- Hobart: +0.1% · +9.3% · $756,951 · +$1k
- Adelaide: −0.2% · +10.5% · $944,909 · −$2k
- Brisbane: −0.6% · +14.8% · $1,104,094 · −$7k
- Canberra: −1.0% · +1.0% · $833,138 · −$9k
- Melbourne: −1.2% · −2.8% · $797,354 · −$10k
- Sydney: −1.4% · −2.0% · $1,244,617 · −$18k
Biggest mover: Darwin (+0.8%) — the only capital with real momentum left. Weakest performer: Sydney (−1.4%). Same country, opposite cycles: Perth values are up 85.5% over five years while Melbourne is −1.6% over the same window.
Even as the headlines soften, the cheapest quarter of homes is still outperforming the most expensive quarter in every capital. The catch this month: the gap is still there, but the pace has faded.
The breakdown — top vs bottom quartile
We split each city into three price bands — the cheapest quarter of homes, the middle half, and the priciest quarter — and track them separately, because a city's one headline number hides what's really going on underneath. Quarterly change in the stratified hedonic dwelling index, three months to July 2026 (Cotality):
- Sydney: lowest 25% −1.4% · middle 50% −3.4% · top 25% −5.2% · spread 3.8%
- Melbourne: −1.2% · −2.8% · −4.6% · spread 3.4%
- Brisbane: +0.5% · −0.6% · −1.2% · spread 1.7%
- Adelaide: +0.4% · −0.1% · +0.1% · spread 0.3%
- Perth: +0.5% · −0.3% · −0.8% · spread 1.3%
- Hobart: +2.6% · +1.9% · +0.2% · spread 2.4%
- Darwin: +4.0% · +2.0% · +2.2% · spread 1.8%
- Canberra: −1.6% · −1.7% · −2.7% · spread 1.1%
In every capital the cheapest quarter beat the most expensive quarter. And it's not a one-quarter fluke: over the past year the cheapest quarter of homes is up 10.8% while the priciest is up just 0.7%. Prestige vendors are wearing the correction; first-rung buyers are the relative winners.
The rental market — yields at a seven-year high
Gross rental yields, annual rent growth and yield direction by capital city, sorted high-to-low yield:
- Darwin: 6.2% gross yield · house rent +11.1% · unit rent +9.4% · ↑
- Hobart: 4.3% · +8.3% · +6.9% · ↓
- Canberra: 4.2% · +4.0% · +1.5% · →
- Melbourne: 4.0% · +5.2% · +4.9% · ↑
- Perth: 3.8% · +8.1% · +7.8% · ↑
- Adelaide: 3.5% · +6.2% · +6.0% · →
- Brisbane: 3.5% · +6.7% · +6.2% · ↑
- Sydney: 3.3% · +6.1% · +4.4% · →
Highest yield: Darwin (6.2%) — up from last month. Lowest: Sydney (3.3%) — stable.
Combined-capital gross yields just hit their highest level since August 2019. Rents are still climbing, but the bigger lift is coming from values falling faster than rents rising. Melbourne now offers the best yield of the big-three east-coast markets while sitting below its 2022 peak. Be realistic though: with investor loan rates around 6.4%, most of these places still cost you money to hold each week.
Budget bands — buying by price point
If your budget is under $500K…
Melbourne units: affordable entry points, tight vacancy, stronger yields and major employment and infrastructure drivers.
Sydney units: Western Sydney Airport and surrounds — very affordable, extremely tight vacancy, with strong employment drivers around them.
Final take — from Nick
It is easy for new investors to read these numbers and get nervous. Last month I told you the cycle had turned. This month it turned harder and wider than expected — the decline didn't stay parked over Sydney and Melbourne, it rolled into Brisbane and Adelaide, and national values just had their worst month since 2022. If you only read the headlines, this is the part where you'd assume the wheels are coming off.
The reality is, yes — values are falling across most of the country and borrowing capacity is still tight. One thing that could turn this from an orderly slide into something ugly is unemployment. Right now it's still low but rising, and a job market that keeps loosening is what would force sellers who today don't have to sell. That is the number I'm watching more closely than the RBA cash rate.
But that aside, this is a standard downturn — one we have seen many times before. Low unemployment, solid population growth, and vendors pulling listings rather than dumping them. Rents are still climbing, vacancy is near record lows, and combined capital yields just hit their best level since 2019. The expensive end is falling fastest while the affordable end holds. Falling prices, fewer competing buyers and more time to negotiate is a better set-up for the prepared buyer than the frenzy of eighteen months ago.
The playbook is this: don't chase the steepest growth line — that momentum has faded. Buy where the demand outstrips supply, where fundamentals stack up, and where credit can still reach. Those are your filters now. If your cash buffers are already thin, then it may be a signal to wait.
Ready to talk?
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