Australian Property Market Slows Amid Rising Interest Rates

Australia's housing market showed its first clear signs of cooling in May, with the national median home price barely changing – a 0.04% dip to AU$908,000 – after two years of strong growth. Prices remain about 7.5% above the level a year earlier, but the slowdown is driven by higher borrowing costs and tighter affordability.

In Sydney, the median house price fell by AU$75,000 in the March‑June quarter, a 4.8% decline – the sharpest quarterly drop in seven years and the second‑largest nominal fall on record. The city’s price now stands at AU$1.485 million. Sales volumes also plunged, with house sales down 39% in the quarter and apartment sales falling 28.2%. The contraction follows two cash‑rate hikes in the first quarter and a third announced for May, further dampening buyer demand.

Analysts note that supply constraints mean new housing stock will not offset the decline for several quarters. While regional markets such as Adelaide and the Northern Rivers continue modest growth, the broader trend signals a more balanced property market ahead.