Australian Property Market Update – August 2026

Author Dr. Ryan Brierty, Chief Economist, Follio

The national downturn accelerated sharply during August, with all five major capital cities now recording falling values. Driven by elevated interest rates, reduced borrowing capacity and stretched affordability, demand-side pressures are weighing heavily on buyer confidence across the country. While Sydney and Melbourne continue to experience the steepest falls, previously strong performers like Perth, Brisbane and Adelaide have now joined the broader decline. The overall market continues to align closely with Follio’s downside scenario, pointing toward an extended trajectory of falling property values through the end of the year.

• National dwelling values fell to -2.44% year-to-date (YTD) by the end of August, dropping 1.6 percentage points in August alone and approximately 4% since the April peak.
• Downturn broadened across five major capital cities, with Sydney (-6.5% YTD) and Melbourne (-6.1% YTD) recording the largest YTD falls. Estimated dwelling values declined by approximately $21,000 in Sydney and $10,000 in Melbourne during August.
• Previously resilient cities lost momentum, with Perth (+6.0% YTD), Brisbane (+3.6%) and Adelaide (+3.3%) all recording declines in estimated dwelling values during August.
• Demand-side pressures dominate as elevated interest rates (4.35% cash rate hold) and persistent underlying inflation (3.6%) continue to constrain borrowing capacity and buyer confidence.
• Projected 4% drop in national dwelling by the end of 2026, as actual price movements continue tracking closely to Follio’s downside scenario.

National Dwelling Values Continue to Fall

At the end of July, national dwelling values were approximately 0.84% below their level at the beginning of the year. One month later, that decline had increased to 2.44%, a further

deterioration of around 1.6 percentage points during August alone.

The speed of the reversal is clear when set against conditions earlier in the year. National dwelling values increased by around 1.5% over the first three months of 2026 before peaking in early April. Since that peak, values have fallen by approximately 4%, more than reversing all of the gains recorded during the first quarter.

Downturn Broadened Across All Five Major Capital Cities

The national downturn accelerated sharply during August, with all five major capital cities now recording falling values.

Sydney’s YTD values moved from 4.8% below their starting level to 6.5% below, with the estimated dwelling value declining by approximately $21,000 to just under $1.2 million.

Melbourne’s YTD values moved from 4.8% below their starting level to 6.1% below, with the estimated dwelling value declining by approximately $10,000 to around $778,000.

What began as weakness concentrated in Sydney and Melbourne has now broadened into a downturn across all five major capital cities.

Resilient Capital Cities Join the Broader Downturn

Perth’s YTD growth has fallen from a peak of 7.3% in May to approximately 6.0%, with the estimated dwelling value down from just over $1.01 million to approximately $998,000.

Brisbane’s YTD growth fell from 4.6% to 3.6%, with the estimated dwelling value declining by more than $10,000 during the month to approximately $1.074 million.

Adelaide’s YTD growth fell from 4.2% to 3.3%, with the estimated dwelling value declining by almost $8,000 to approximately $933,000.

Demand-Side Pressure Is Now the Dominant Influence

Elevated interest rates, reduced borrowing capacity and stretched affordability continue to constrain demand, while weaker buyer confidence is contributing to lower sales activity and falling dwelling prices across the major capital cities.

There was some encouraging news on inflation. Annual headline inflation fell from 3.8% in June to 3.5% in July. Underlying inflation remains more persistent, with the trimmed mean unchanged at 3.6%, leaving inflation above the Reserve Bank’s 2 to 3% target range. The cash rate was left unchanged at 4.35% in August.

Follio’s Outlook

The Australian property market underwent a clear shift in August, moving from early-year gains into a steep downturn. Driven by elevated interest rates, reduced borrowing capacity and stretched affordability, demand-side pressures have taken control of market dynamics. With monthly price falls now extending beyond Sydney and Melbourne to impact previously resilient cities like Perth, Brisbane and Adelaide, the market has officially entered a widespread contraction phase.

The key question moving forward is whether the rate of decline stabilises, not whether prices have reached a floor. A stabilising rate of decline would not indicate that values have bottomed, since prices could continue falling for an extended period even as the pace of those falls moderates. Interest rates remain the critical variable, with actual price movements continuing to track closely to Follio’s downside scenario – projecting national dwelling values to finish 2026 around 4% below their starting level.

How Follio Supports Your Property Strategy

Follio is a qualified Australian property investment advisory and buyer’s agency dedicated to helping you build long-term wealth through real estate. By combining data-driven market research with personalised, end-to-end guidance, we support both first-time investors and experienced portfolio builders across Australia. Our services:

• Property advice & strategy: Tailored investment strategies built around your goals, risk profile and timeline. Designed to support and evolve through your entire property journey.
• Property research & analysis: Access to leading property data and analytics to help you make informed decisions.
• Buyers agency: We do the heavy lifting to secure your investment property. From sourcing, property audits, price analysis and negotiations through our qualified local buyer’s agents.
• Portfolio evaluations: An annual health check of your portfolio, providing an opportunity to assess progress, identify gaps and opportunities to optimise your investments.

Uncertain where the market is heading next? Book a strategy session with Follio to review your position and plan your next move with confidence. View our full market report here.