SYDNEY, June 1 – Australian home prices flattened in May as higher borrowing costs, the Middle East conflict, and planned tax changes pushed prices in Sydney and Melbourne into sharp declines, data from Cotality showed on Monday.
The Reserve Bank of Australia has raised interest rates three times this year – in February, March, and May – to 4.35% to tame inflation. The Middle East conflict has driven energy costs sharply higher, hitting consumer and business sentiment, and planned tax changes have prompted investor selling.
Key details:
• National home prices were unchanged in May after a streak of monthly gains. Prices had been hitting record highs since early 2025.
• House prices in Sydney and Melbourne fell 0.9% and 0.8% respectively in May, leading declines, and sales volumes dropped. Advertised listings in both cities have climbed to above-average levels.
• Even more affordable markets in Sydney and Melbourne, which had been lifted by government incentives for first-time buyers, fell.
• Other capital cities recorded slower gains. Perth prices rose 1.5%, while Brisbane and Adelaide gained 0.9% and 0.5% respectively, supported by still-low inventory levels.
"While the speed of value change remains very different from city to city, the direction is becoming more consistent, with most markets losing momentum as demand-side headwinds intensify," said Tim Lawless, Cotality's research director.
