@realty achieved another strong result in August 2026, recording $300,121,133 in property sales across Australia and New Zealand.
The result comes as Australian home prices declined for a fifth consecutive month, with higher interest rates continuing to reduce borrowing capacity and weigh on buyer demand.
National home prices fell 0.2% during August and are now 2.7% below their March 2026 peak. Despite the recent downturn, prices remain 1.8% higher than a year ago and 27.5% higher than five years ago.
Capital-city markets are experiencing the greatest impact, while regional areas and more affordable property types continue to demonstrate greater resilience.
Higher interest rates continue to affect home prices
Australian home prices have now fallen for five consecutive months as the cumulative impact of higher interest rates flows through to housing demand.
The Reserve Bank has increased the cash rate by 75 basis points this year.
Existing borrowers are facing higher mortgage repayments and reduced disposable income, while prospective buyers have experienced a decline in borrowing capacity.
This adjustment is now clearly reflected in the market. National home prices are 2.7% below their March peak, while combined capital-city prices have declined 3.6%.
Budget tax changes may also be affecting investor demand, while ongoing price falls could be encouraging some buyers to delay purchasing until conditions begin to stabilise.
Capital cities bear the greatest impact
The difference between capital-city and regional market performance became more pronounced during August.
Combined capital-city prices declined 0.3% over the month and are now only 0.2% higher than a year ago. Prices across the capitals sit 3.6% below their peak.
Regional prices, by comparison, remained unchanged during August. They are still 6.6% higher year-on-year and sit only 0.5% below their peak.
Adelaide records August’s largest decline
Adelaide recorded the largest monthly fall of any capital city, with prices declining 0.9%. This followed another fall in July, indicating that momentum has slowed after several years of exceptional growth.
Despite the recent downturn, Adelaide prices remain 8.0% higher than a year ago and 71.5% higher than five years ago. Following such significant growth, higher mortgage rates are increasingly limiting what buyers can afford to pay.
Sydney and Melbourne experience the largest corrections
The current downturn remains most advanced in Australia’s two largest housing markets.
Sydney home prices declined 0.3% in August and are now 4.9% below peak and 3.6% lower than a year ago.
Melbourne prices fell 0.2%, leaving them 5.3% below peak and 4.3% lower year-on-year.
Affordable property types continue to outperform
Units continue to outperform houses nationally, with unit prices 3.0% higher than a year ago compared with 1.5% growth for houses.
Units have also experienced a smaller correction from peak. National unit prices are approximately 1.8% below peak, compared with around 2.9% for houses.
Affordability is likely to be a major contributor. As higher interest rates reduce borrowing capacity, some buyers are adjusting their expectations around location, property type and size. This is increasing demand for more affordable options.
The trend is particularly evident in Sydney, where house prices are approximately 5.8% below peak compared with 3.2% for units. In Melbourne, house prices are around 6.3% below peak, while units are only 2.2% lower.
Regional markets remain resilient
Regional home prices were unchanged in August and remain 6.6% higher than a year ago. They are also only 0.5% below peak, compared with a 3.6% decline across the combined capital cities.
Relative affordability and constrained housing supply continue to support many regional markets.
The spring selling season will provide an important test of this resilience. Spring typically brings an increase in new listings, and the market’s performance will depend on whether buyer demand remains strong enough to absorb the additional supply.
Inflation increases the risk of another rate rise
The Reserve Bank left the cash rate unchanged at 4.35% in August following 75 basis points of increases earlier this year.
Although annual headline inflation eased from 3.8% to 3.5% in July, underlying inflation was stronger than expected. This increased financial-market expectations that the cash rate could reach 4.60% before the end of the year.
Another increase would further reduce borrowing capacity. Continued uncertainty around the peak in interest rates may also encourage prospective buyers to remain cautious until financing conditions become clearer.
Negative gearing and capital gains tax changes
The full impact of the budget changes to negative gearing and capital gains tax remains difficult to isolate.
Investor search activity on realestate.com.au has declined significantly since the budget, while lending data also indicates that investor borrowing has pulled back.
However, interest rates remain the primary headwind. Higher rates affect borrowing capacity across both owner-occupiers and investors, while the tax changes are more concentrated within the investor segment.
Although it is too early to determine how much of the recent price decline can be attributed to the reforms, weaker investor demand may reduce competition and contribute to further downward pressure on prices.
Market outlook
Home prices are expected to remain under pressure over the coming months, particularly across the capital cities.
Higher interest rates have already reduced borrowing capacity and weakened demand, while the latest inflation figures have increased the possibility of another rate rise before the end of the year.
The spring selling season will be an important test for the market. The key factor will be the balance between new listings and the depth of buyer demand.
If the typical spring increase in properties for sale occurs while borrowing capacity remains constrained, buyers will have more choice and vendors may face greater competition. This could place additional downward pressure on prices and make accurate pricing, strong presentation and effective marketing increasingly important.