The Australian

‘Perfect storm’ hits property market

by Mackenzie Scot and Ben Wilmot

Surging growth in the nation’s mid-sized capitals has run out of steam as prices in once-resilient cities begin to tumble

Data from property researcher Hotspotting has revealed heat is dissipating in Perth and Brisbane, with market conditions rapidly cooling following three interest rate rises and the Albanese government’s decision to abolish negative gearing on established homes and redesign capital gains tax.

Hotspotting’s market thermometer, which analyses stock on market, sales, vacancy, days on market and quarterly price momentum data over eight quarters, recorded a national surge in markets that the firm ranked as “declining”, with a heavy concentration in Perth and the rest of Western Australia, and Brisbane and other parts of Queensland.

By contrast, the eastern capitals of Sydney, Melbourne, Hobart and Canberra suffered only modest increases in their declining sub-markets, indicating that buyers were rotating out of them rather than a market collapse.

Hotspotting managing director Tim Graham said the disruptive environment had struck property markets more unevenly than headline data suggested.

“This quarter lands in the middle of what we call the mother of all disruption periods,” he said.

“Three RBA rate rises, geopolitical trade uncertainty, cost-ofliving pressures and federal budget changes have all hit at once, but the impact is not uniform.”

“It’s a perfect shit storm,” he said of Labor’s investor tax changes.

“Higher interest rates are a factor, but the budget has smacked any sentiment left in the market. That has been the final catalyst in all of this.”

The firm said Brisbane and Adelaide were also below the national average on its rankings, but Mr Graham said there were differences within cities.

In Sydney, the higher end of the market had been affected while first-home buyer suburbs were “ticking along” and regional NSW and the ACT were starting to turn the corner.

Coinciding with the Reserve Bank’s decision to hold interest rates at 4.35 per cent, ANZ is the latest major bank to tip big prices falls over the next 18 months.

The revised-down forecasts anticipate capital city prices to fall 10.6 per cent by the end of next year, before staging a 4.3 per cent minor recovery in 2028.

Ray White chief executive of performance and valuations Thomas McGlynn agreed the national market was increasingly diverging, with price falls playing out at differing paces.

He anticipates mid-sized capitals will have a shallower downturn than Sydney and Melbourne, in line with ANZ.

“These markets may take a little bit longer to bounce out of softer conditions than what we’ve seen in Sydney and Melbourne,” Mr McGlynn said.

“But I just don’t think conditions are going to remain as they are for as long as what we’ve already seen in Sydney and Melbourne.”

On Hotspotting’s measure, the June 2026 quarter marked a decisive inflection point.

Nationally, locations with positive rankings fell from 52.1 per cent to 43.3 per cent.

This 8.8-point retreat was driven by a near-quadrupling of declining markets (132 to 482) and a surge in inconsistent classifications (422 to 624).