Australia's housing market slump deepens as mortgage sizes surge

Australian home prices fell 0.4% in June 2026, the biggest monthly drop since late 2022, while overall values remain 7.3% higher than a year earlier. Analysts say the modest decline leaves the affordability gap largely untouched and that decades of further price falls would be needed to make housing affordable.

The average mortgage has risen to $735,000, an 11% increase from a year earlier, with New South Wales averaging $860,000 and Queensland and Western Australia each seeing rises of more than $100,000. Households paid $33.6 billion in mortgage interest in the first quarter of 2026 – the fourth‑largest quarterly amount on record – and now devote about 5.4% of income to interest, a share higher than during the late‑1980s peak.

Political leaders debated the causes. Opposition Leader Angus Taylor and Liberal deputy leader Jane Hume linked the price drop and mortgage pressure to recent tax changes announced in the federal budget. Prime Minister Anthony Albanese emphasized government schemes such as the 5% deposit guarantee aimed at helping first‑home buyers, while experts warned that some borrowers could face negative equity if prices fall further, though widespread defaults were deemed unlikely given strong labor market conditions.