The First Price Data Since the Budget Is In. Here's What It Actually Shows.

We've had months of talk about softening auction clearance rates. Now we've got the first hard settlement data covering the period since the May budget's negative gearing and CGT changes; and since three RBA rate hikes pushed the cash rate to 4.35%. Cotality's Home Value Index, released 3 August, shows national dwelling values fell 0.7% in July; the steepest monthly decline since December 2022.

A quick caveat up front: this is one month of data, barely two months removed from the budget changes and only weeks past the most recent rate hike. It tells us the market has turned, not how far or how fast it will keep moving. We'll be watching the next few releases closely before drawing firm conclusions; and so should you before making a decision based on this alone. And remember the is a lag from contract to settlement, so data will become more meaningful over the coming months.

What actually moved

- Sydney and Melbourne led the falls; down 1.4% and 1.2% for the month respectively, and now sitting 5.3–5.5% below their earlier 2026 peaks.

- Regional markets turned too; the first monthly fall in over three years, though only a modest 0.2% dip.

- The correction is concentrated at the top end; higher-value homes fell 3.2% over the past three months, while lower-tier values actually rose 0.3% over the same period. This isn't a broad-based crash, it's the expensive end of the market absorbing higher rates and tighter investor conditions first.

- It's a genuinely two-speed market; Perth, Adelaide, Darwin and parts of regional SA, WA and Tasmania are still flat to rising. Sydney and Melbourne are carrying almost all of the national decline.

The bit that matters most: this isn't affordability relief

Rental growth hasn't slowed at all. National rents are still up 5.9% annually, and the vacancy rate sits at just 1.7%, nowhere near the 3% that's generally considered a balanced market. A property correction driven by rate rises and investor-side tax changes doesn't automatically translate into more supply or cheaper rent. If anything, a rougher environment for property investors can tighten rental supply further before it improves it, if fewer investors are willing to hold or buy rental stock.

So for clients: falling values are a story about ownership cost and investor returns, not about whether renting gets any easier this year.

What I'd watch from here

- Whether the fall broadens or stays concentrated at the top end and in Sydney/Melbourne.

- Whether investor listing volumes rise as the 2027 negative gearing and CGT changes get closer, which could add short-term buyer supply even with dampening prices.

- The next RBA decision; rates were held in August after three hikes this year; a further hike or a hold-and-cut pivot will shape the next few months more than anything else in this data.

One month of falling prices is a data point, not a trend. We'll keep tracking it and flag anything material as it develops.

 

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