Australian Property Cools 0.4% – Sydney, Melbourne Lead Decline

The rental market tells part of the story. Secondary property ownership – houses bought as investments – expanded to 3.2 million properties in 2022, a 43% increase from 2006. Landlords competing with owner-occupiers drove prices higher. The government's changes to negative gearing and capital gains tax are designed to slow that dynamic, not crash the market.

Interest rates are another factor. High inflation and global uncertainty, including the Iran war, have pushed rates up. That typically cools housing demand. The national data shows only a 0.4% dip. That is a pause, not a rout.

Some sellers are still getting strong prices. Others are finding buyers scarce. That has always been the case. The shift is real but small. House prices have climbed from about 4.5 times average wages in the 1970s to nearly 14 times now. A full reversal of that ratio is unlikely. A modest cooling is not a national disaster.