AUSTRALIA / RankWire.AI / – Australia’s real estate sector faced a significant setback in the June quarter, losing $34.1 billion in value as property prices started to weaken following years of robust growth. The total value of the country’s housing stock decreased by 0.3%, bringing it down to $12.689 trillion. This marks the first quarterly decrease since September 2022. A forecast published this month suggests a 10% peak-to-trough decline in home prices, which would equate to approximately $1.3 trillion when applied to the current national property total, emphasizing the vast amount of wealth linked to Australian homes.
According to the Australian Bureau of Statistics, household ownership of residential properties was valued at $12.183 trillion at the end of June. The nation recorded 11.531 million dwellings, an increase of 54,400 during the quarter. Nonetheless, the average dwelling price fell by $8,200 to $1.1004 million. This quarterly decrease marked a departure from the strong gains seen in recent years. Despite the decline, the total value of Australia’s housing stock remained 8.5% higher than it was a year earlier.
The largest decrease in housing wealth occurred in New South Wales, which saw a $92.9 billion fall during the quarter. Victoria experienced a decline of $44.3 billion, while the Australian Capital Territory lost $1.4 billion. All other states and territories, however, saw rises in total residential values. Meanwhile, average dwelling prices also fell in New South Wales, Victoria, and the ACT. Despite this, New South Wales maintained the highest mean dwelling price at $1.305 million, with Queensland close behind at $1.131 million.
Home values retreat amid rising borrowing costs
Recent market data indicates that the housing market slowdown persisted beyond the June quarter. In August, national average home prices declined by 0.9%, marking a continuation of five consecutive months of monthly decreases. Shane Oliver, AMP’s chief economist, noted that prices had fallen 3.6% from their peak by the end of August. His forecast projects a roughly 10% national decline from peak to trough. Applying this percentage to the residential property stock valued at approximately $12.7 trillion suggests a loss of about $1.3 trillion in market value.
This slowdown has coincided with rising borrowing costs. The Reserve Bank of Australia increased the cash rate three times in 2026, reaching 4.35%. These hikes total 75 basis points. Financial institutions have passed on these higher rates to mortgage and deposit products, leading scheduled mortgage payments to approach their 2024 peak relative to household disposable income. The central bank’s August assessment also indicated that national housing prices were 1.6% below their March peak.
Sydney and Melbourne Lead the Decline in Property Values
Among the major markets, Sydney and Melbourne have experienced the most substantial recent declines in housing prices. Auction clearance rates have also fallen below their long-term averages. Although price drops are becoming more widespread across Australia, regional differences remain pronounced. Brisbane and Adelaide have shown signs of weakening in the latest central bank review, while Perth and other regional areas continue to record price gains, albeit at a slower pace in some locations. These regional disparities have resulted in a nationwide downturn that varies significantly between individual housing markets.
The latest statistics also highlight that this current decline comes after a much larger increase in Australian property values since the pandemic started. In August, national housing prices were still about 5% higher than they were a year earlier. They also remain roughly 50% above levels seen at the pandemic’s outset. Official data on dwelling stock for the September quarter is scheduled for release on December 1. Until then, the most recent national figure remains the $34.1 billion quarterly loss recorded through June.