Interest Rate Hikes and Tax Changes for Investors BUT values still remain within 1% of record highs.

Despite interest rate hikes and tax changes for investors, the national median home value is still higher than it was in February, when the Reserve Bank raised interest rates for the first time since 2023.

“Weighing on home prices has been the cumulative impact of three interest rate rises which have reduced borrowing capacities for buyers,” said Anne Flaherty, the REA Group senior economist.

“Changes to housing taxation following the 2026 Federal Budget also could be impacting the market.”

Under measures introduced in the budget, negative gearing will be restricted to new homes only, and the 50% capital gains discount for assets held for more than 12 months will be abolished and replaced with an inflation-indexation model.

The reforms were intended to level the playing field between first-home buyers and investors, who had become increasingly active in the past year as home prices rose.

Inspite of this, prices are still close to record highs, putting any negative effect on prices in perspective.

Even after three months of falls, property prices are still almost as expensive as ever.

“While prices were lower over June, most homeowners are still sitting on significant gains, with the median price of home 5.8%, or $71,900, higher compared to a year ago,” Ms Flaherty said.

Home values have grown by almost 35% in the past five years at the national level, and are up 81% in Adelaide, 85% in Brisbane and 96% in Perth.

“Regional markets outperformed capitals over both the month and the year,” Ms Flaherty said.

“Despite recent declines, home prices remain close to record highs and houses have become out of reach for a growing share of buyers, driving more to the unit market.”

Many buyers are making more informed decisions before buying but, because of the huge under-supply of homes and increasing demand, the housing market should be able to outweigh any negativity.

The path of interest rates could influence future price movements and there is still potential for another rate rise before the end of 2026, but expectations of additional hikes have moderated.

Once it becomes apparent that interest rates have peaked, Buyer confidence will resume. Regional areas remain undersupplied relative to migration and population growth, which will, without doubt, limit the extent to which home prices fall.