Australian housing market slows as rate hikes push up buyer costs

Three interest‑rate hikes by the Reserve Bank of Australia in 2026 have begun to dampen the housing market. REA Group’s June Market Snapshot shows national home prices were flat in May, while Sydney and Melbourne recorded their third consecutive month of price declines. Supply remains tight in most capitals, but higher borrowing costs have increased buyer choice in the southeast, with auction clearance rates falling below 50% and typical sales completing in about 30 days.

The higher rates have also raised the income needed to afford a median house. In Sydney, a household now needs roughly $178,000 a year, up from $170,000 earlier in the year; in Melbourne the figure rose to over $108,000. Similar pressure is felt in Brisbane and Perth, where median prices have risen 3‑5% despite the rate hikes. Economists forecast price falls of at least 2% nationally in 2026, and vendor discounts have climbed to 3.3% as buyers gain leverage.

The slowdown extends beyond the two largest cities, with Brisbane, Perth and Adelaide also showing softer conditions. While the federal Budget includes housing measures, analysts say it is too early to assess any impact on prices.