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Remove items from your saved list<\/a> to add more.<\/p>\n AAA<\/p>\n House values have fallen across almost all price points in Melbourne and Sydney over recent months, with the biggest losses for sellers concentrated in the top end of the market.<\/p>\n While Sydney had a very modest 0.2 per cent growth in the bottom quartile, values have fallen across the two capitals, Cotality data shows, as rate hikes, global uncertainty due to conflict in the Middle East and the impact of policy announcements in the federal budget leave buyers cautious<\/a>.<\/p>\n<\/p>\n The Reserve Bank on Tuesday kept the cash rate steady at 4.35 per cent<\/a> following three consecutive rate rises this year, which have added to the cost of mortgage repayments<\/a><\/p>\n The upper quartile \u2013 also known as the family home market \u2013 of properties has been hit hardest, falling about four per cent in both Melbourne and Sydney over the three months to the end of May.<\/p>\n This contrasts with gains in the smaller capitals, which have continued to rocket up, with Perth seeing an almost four per cent gain in the top quartile and an over six per cent gain in its bottom quarter.<\/p>\n Cotality head of research for Australia, Gerard Burg, said it wasn\u2019t surprising that the top end of the market<\/a> in the two most expensive capitals was seeing falls.<\/p>\n Related Article \u201cThere\u2019s a higher buy-in cost, and that limits demand at times like this,\u201d he said. \u201cWe\u2019re talking about the top echelon of properties \u2013 this is a pool of homes that are harder to access for many people in terms of affordability and borrowing capacity.\u201d<\/p>\n Burg said factors like the federal government\u2019s five per cent deposit scheme were helping to keep competition in the bottom quartile, but that first home buyers would also be more sensitive to further rate hikes.<\/p>\n He thought affordability and borrowing pressures might be forcing buyers who were previously looking to the middle band to bid on cheaper homes, increasing competition.<\/p>\n \u201cUntil recently, investors were probably focused<\/a> on that part of the market too,\u201d he said. \u201cBut obviously, they will be affected by the announced policy changes around the capital gains discount and negative gearing.\u201d<\/p>\n Westpac senior economist Matthew Hassan said it wasn\u2019t unusual for the top quartile to feel the brunt of a downturn.<\/p>\n \u201cIt runs hotter during upward swings, and gets hit harder during corrections,\u201d he said.<\/p>\n \u201cWhat\u2019s unusual is the milder price corrections in the bottom and middle tiers. The lower tiers are really out-performing.\u201d<\/p>\n Related Article But Hassan thought there were early signs that a correction would flow through to the wider market.<\/p>\n \u201cWe had three rate hikes in the three months to May alone, and it\u2019s beginning to weigh down on those lower segments too,\u201d he said, noting that the government\u2019s proposed changes to capital gains tax and grandfathering of negative gearing would slow investment and disincentivise those with existing homes from selling.<\/p>\n Sydney-based buyer\u2019s agent Michelle May said the impact at the bottom end of the market was obscured by government incentives, but she had noticed investors pulling back.<\/p>\n \u201cObviously, if you offer people free money, prices are going to go up,\u201d she said.<\/p>\n \u201cBut it has cooled \u2026 I\u2019m seeing a lot of properties being passed-in, some taken off the market and more off-market activity.\u201d<\/p>\n She cautioned home owners \u2013 particularly those who\u2019d bought recently \u2013 against following the ups and downs of property values too closely.<\/p>\n \u201cIt\u2019s only going to be a loss or gain when you actually sell,\u201d she said.<\/p>\n Burg warned Sydney in particular could experience a more significant fall in house values.<\/p>\n \u201cWe\u2019re starting to see the decline in Sydney pick up pace and, because of the accumulated value over time, it has further to fall than Melbourne or the other capitals,\u201d he said.<\/p>\n In contrast, he thought Melbourne prices could rise in the medium term.<\/p>\n A growing population and the slowdown of the construction boom Melbourne led from 2020 through to the end of last year \u2013 during which Victoria built a third of the country\u2019s new homes \u2013 may result in a supply crunch.<\/p>\n Property Home Base director Julie DeBondt-Barker said for Melbourne first home buyers \u201cit might be as good as it gets\u201d, with many investors \u201chitting pause\u201d<\/a> until the impact of the government\u2019s announced policies became clear.<\/p>\n \u201cI would be absolutely jumping on this,\u201d she said. \u201cIt is a really good time for first home buyers because there are fewer investors competing against them.\u201d<\/p>\n Both Burg and Hassan noted the continued rise of the Perth, Adelaide and Brisbane markets, but said all three had considerably less supply than the larger capitals, which had been driving growth.<\/p>\n \u201cWe\u2019re seeing a loss of momentum in those capitals too,\u201d Burg said. \u201cPerth in particular has come down quite a bit compared to late last year.\u201d<\/p>\n Hassan thought it would take around 12 months for the \u201cdust to settle\u201d on a market \u201cin flux\u201d, but that there would be signals to look for in coming months.<\/p>\n \u201cAn important indicator is usually how the market performs in spring,\u201d he said. \u201cThat will be a significant test of whether the market is really softening.\u201d<\/p>\n Save<\/p>\n You have reached your maximum number of saved items.<\/p>\n![\"The](\"https:\/\/www.newsbeep.com\/au\/wp-content\/uploads\/2026\/05\/1779515471_685_17a75bb11f4f57fea35903e2898cffdc9938c658.jpeg\")
<\/a><\/p>\n![\"Property](\"https:\/\/www.newsbeep.com\/au\/wp-content\/uploads\/2026\/06\/ec8de9550a9cf01cd8297f777cd7c376c3baa163.jpeg\")
Property values have declined in both Sydney and Melbourne, particularly in the top end of the market.Luis Enrique Ascui<\/p>\n![\"Buyers](\"https:\/\/www.newsbeep.com\/au\/wp-content\/uploads\/2026\/06\/d946f93d153ac263b172d736d3ce26c5ed8909c3.jpeg\")
<\/a><\/p>\n![\"Spring](\"https:\/\/www.newsbeep.com\/au\/wp-content\/uploads\/2026\/06\/496f73315d466a1a59f34830220c3ae223d71a12.jpeg\")
Spring will be a test for the property market, one expert says.<\/p>\n