Property Prices Are Falling, but Not Everywhere: Where the Growth Actually Is

The Falls Are Real but Modest

A 0.3% monthly decline sounds alarming until you put it in context.

Prices across every capital city and regional area except Melbourne remain higher than they were 12 months ago. The corrections happening in Sydney and Melbourne are real but they are not crashes. They are normal cyclical adjustments in markets that ran hard and are now digesting three consecutive rate hikes, stretched affordability, and reduced investor demand following the budget changes.

Could we see a sideways market for the next three to six months? Yes. The data supports that expectation. What the data does not support is the narrative that Australian property is collapsing.

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Regional Markets Are Holding Up and Then Some

The more important story in the June data is the divergence between capital cities and regional markets.

Regional areas are holding up significantly better than the combined capitals. This is not a surprise to anyone who has been paying attention to the underlying drivers. Regional markets have supply constraints, growing populations through internal migration, and affordability that capital city markets lost years ago.

Within that regional outperformance, there are suburbs that have recorded 20% growth over the last 12 to 18 months. Not short-term blips. Sustained growth in fundamentally strong locations that the headlines are not covering because they are not in Sydney or Melbourne.

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The Housing Shortfall Is Getting Worse, Not Better

Building approvals for May 2026 fell 1.1% following a decline in April. The fall was largely driven by a 10.4% drop in private dwellings excluding houses, which includes townhouses, apartments, and semi-detached properties. That category is now 8.6% lower year on year.

Detached house approvals lifted 2.8%, the highest level since September 2021. Western Australia was particularly strong, with detached housing approvals rising 9.9% to sit 24.5% above May 2025.

The headline approval numbers sound reasonably positive until you factor in the completion rate. A significant proportion of approved projects never reach completion. Builders go insolvent. Finance falls through. Projects get shelved when margins are too thin. Record-high insolvencies in the construction sector mean that approval numbers overstate the actual supply coming to market.

When you layer the SMSF borrowing ban, the negative gearing changes, the CGT changes, and three rate hikes on top of an already chronic housing shortfall, the conditions for further supply deterioration are firmly in place. Fewer investors buying means fewer rental properties. Fewer rental properties in a market already running at record low vacancy rates means rents accelerate further.

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Are We Approaching Peak Fear?

Consumer confidence is starting to tick higher after hitting multi-decade lows earlier in 2026. That is significant.

The pattern that has played out in every major rate cycle over the past 50 years is consistent. Rates rise, confidence falls, markets soften, uncertainty peaks, rates eventually cut, confidence recovers, and markets respond sharply to the upside.

Rate cuts are tipped for 2027. When they arrive, borrowing capacity recovers, yields that have been improving during the flat period look increasingly attractive, and the supply that was not built during the high-rate period is simply not there to meet the recovering demand.

We break down the full price and rent outlook through 2027 in what the 2026 budget means for prices and rents.

The investors who positioned themselves during the uncertainty consistently arrive at the other side in a stronger position than those who waited for confirmation. The window between now and rate cuts is where serious investors are building their positions quietly while others are watching the headlines.

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What Commonwealth Bank's Regional Movers Index Is Showing

CBA's Regional Movers Index is tracking capital city to regional Australia migration at the highest level on record. The breakdown tells the story clearly:

• Regional to regional movement: 12.7%
• Capital cities to regional: 11.9%
• Regional to capital cities: 9.2%

The flow is overwhelmingly toward affordability. People are leaving expensive capital cities for regional areas where their money goes further and the lifestyle equation makes more sense.

The Queensland story is particularly striking. Only 1% of people are vacating Queensland's capital city but 20% of all movers are settling in regional Queensland. That demand flowing into regional markets with already constrained supply is exactly the dynamic that drives sustained price growth.

In Western Australia, virtually nobody is leaving Perth but significant numbers are moving into regional WA.

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The Top Regional Locations Worth Watching

CBA's data identifies the top five local government areas by share of total net migration to regional Australia:

1. Sunshine Coast
2. Greater Geelong
3. Fraser Coast
4. Murrumbidgee
5. Lake Macquarie
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By annual growth in net capital to regional migration, the standout performers are:

• Toowoomba: 236% growth in net migration
• Broome: 168%
• Townsville: 159%
• Clarence Valley: 144%
• Indigo: 133%\
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Toowoomba and Townsville are markets with chronic housing supply shortfalls. Townsville has also seen construction costs increase approximately 20%, which puts upward pressure on the replacement cost of existing stock and supports values for established properties.

For the markets the data favours right now, see our latest regional hotspot report. 

They are markets where demand is measurably increasing, supply is constrained, and affordability remains accessible compared to capital city alternatives.

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Why Being a Borderless Investor Wins Right Now

The investors building serious portfolios right now are not waiting for Sydney or Melbourne to correct further. They are looking across the country and identifying which markets have the demand, supply constraints, and affordability to deliver growth regardless of the national headline.

At any given time some assets will be flat or declining. That is normal. The goal is having 80 to 90% of the portfolio moving in the right direction at any given point. That requires being a borderless investor.

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Frequently Asked Questions

Are Australian property prices crashing in 2026?
No. National home prices fell 0.3% in June 2026 according to PropTrack, but prices remain 5.8% higher than a year ago. Every capital city and regional area except Melbourne is still up annually. A modest monthly decline after a period of strong growth is a normal cyclical correction, not a crash.

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Which Australian property markets are performing well right now?
Regional markets are holding up significantly better than capital cities. Queensland regional areas are seeing the strongest internal migration flows with 20% of all movers settling in regional Queensland. Toowoomba, Townsville, Sunshine Coast, Fraser Coast, and Greater Geelong are among the standout locations by net migration growth according to CBA's Regional Movers Index.

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Why are regional markets outperforming capital cities?
Three factors are driving the divergence. Regional markets have stronger affordability relative to incomes. Internal migration from capital cities to regional areas is at record highs according to CBA data. Supply constraints in well-located regional centres mean demand consistently outpaces available stock. Capital cities are more sensitive to rate movements because higher prices mean larger loans and a smaller pool of buyers at any given rate level.

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Is now a good time to buy investment property in Australia?
For well-researched markets with demand drivers, yes. Consumer confidence is beginning to recover from multi-decade lows. Rate cuts are tipped for 2027. The investors who position themselves during periods of uncertainty consistently arrive at the recovery in a stronger position than those who waited for confirmation. Every month of delay on a growing asset is foregone compounding.

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When will Australian property prices recover?
Rate cuts are currently forecast for 2027. When borrowing capacity recovers, demand that has been suppressed by high rates returns quickly to a market where supply has been contracting. Regional markets with genuine demand drivers are likely to perform well before that point given the internal migration data and supply constraints already in place.

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The Bottom Line

The market is slowing. That is true and the data confirms it. Certain markets are in correction. That is also true.

What is equally true is that regional markets are outperforming, internal migration to affordable areas is at record levels, the housing shortfall is getting worse not better, rental growth is accelerating, and rate cuts are on the horizon for 2027.

Hope is not a strategy. Waiting for a crash that may not arrive is not a strategy either. A clear investment plan, executed in the right markets, with the right assets, during the period of maximum uncertainty is how serious wealth gets built through property cycles.

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Ready to Position Your Portfolio Ahead of the Recovery?

At Search Property, we help Australians cut through the noise and build data-driven investment strategies aligned with long-term wealth goals. Our buyers agents have helped thousands of clients build wealth through property because we focus on fundamentals, not headlines.

Book a FREE investment assessment call with Search Property. We'll discuss your goals and position, and help you build a clear plan to move forward with confidence.

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