The Property Market Is Splitting: Where Prices Are Falling and Where They're Holding

After the RBA's third rate hike of 2026 on Monday, the headlines have been blunt: prices are falling. That's true in some places. It's not true everywhere. And if you're trying to buy right now, the difference matters.

National dwelling values are still up 9.9% on this time last year. But over the last quarter, Sydney slipped 0.2% and Melbourne dropped 0.6%. Brisbane, Perth and Adelaide are still climbing. Regional markets like Geelong, Ballarat and the Sunshine Coast are holding firm.

The market isn't collapsing. It's splitting. Here's what that means for you.

What just happened

The cash rate sits at 4.35% after Monday's 25 basis point increase, the third consecutive hike this year. Major banks are passing it on, with variable rates lifting by 0.25% effective 22 May.

For a borrower with a $600,000 loan, that's roughly an extra $90 a month. On a $1 million loan, closer to $150. Combined with the February and March hikes, the average mortgage holder is paying about $2,650 more per year than they were at the start of 2026.

Borrowing capacity has tightened too. Each 25 basis point increase trims around $25,000 off what a typical borrower can access. If your pre-approval was issued before February, it's worth getting a fresh number.

Where prices are softening

Sydney and Melbourne are doing the heavy lifting on the downside. CoreLogic's quarterly numbers show:

• Sydney: dwelling values down 0.2% over the past three months
• Melbourne: down 0.6%
• The premium end (above $2.5m) is leading the falls in both cities

Auction clearance rates tell a similar story. Melbourne has been sitting in the 55 to 60% range for five weeks, well below the 70%+ readings that signal genuine buyer competition. Sydney is doing slightly better at 60 to 65%, mostly off the back of premium suburb activity.

Translation: vendors in these markets are negotiating. Properties are sitting on the market longer. Asking prices are getting trimmed before listing.

Where prices are holding

Brisbane, Adelaide and Perth are still posting positive monthly growth. The drivers are interstate migration, tighter rental markets and relative affordability. Buyers priced out of Sydney and Melbourne keep arriving with deposits.

Regional Australia is quieter but firm. Areas like Geelong, Ballarat, Bendigo and the Sunshine Coast haven't seen the same softening as the major capital city centres. Lifestyle demand and limited new supply are doing the work.

If you're buying in any of these markets, don't expect bargains. Expect competitive bidding on quality stock and patient negotiation on the rest.

What this means if you're buying

A few practical adjustments to make this month:

Refresh your pre-approval. If your numbers were calculated before May, they're now out of date. Lenders will rerun the assessment at the new variable rate, which may shift your maximum by $25,000 or more.

Decide which market you're actually in. "The Australian property market" doesn't exist as one thing right now. Sydney and Melbourne buyers have more room to negotiate than Brisbane or Adelaide buyers. Set your expectations to your suburb, not the national headlines.

Watch days on market, not just clearance rates. A property that's been listed for 60 days in Melbourne is a different conversation than one that's been listed for 14. Long listings are where the best negotiating happens.

Don't try to time the bottom. Westpac thinks rates will go higher. CBA thinks they're done. The major banks didn't agree on rates a year ago either. If a property suits your budget at today's repayments and you plan to hold for five plus years, the timing matters less than the property.

Stress test your repayments. Run your numbers at 3% above the current variable rate. If that's still comfortable, you have buffer. If it's tight, look at a smaller loan or wait to save more deposit.

Should you wait?

Plenty of buyers are asking this. The honest answer is: it depends on where you're buying.

In Sydney and Melbourne, waiting another quarter could give you better value, especially in the premium and inner ring markets that are softening fastest. Vendors are increasingly motivated.

In Brisbane, Perth and Adelaide, waiting probably costs you. Prices in these markets have stayed positive through every rate hike this year and there's no signal that's changing.

If you're buying for the long term and your finances are solid, the market you're in matters more than the cycle you're in. Borrowing capacity is unlikely to get materially better in the next six months. Stock levels typically tighten through winter.

What to track this weekend

Saturday's auctions will be the first real read on buyer sentiment after the hike. Watch:

• Clearance rates by capital city. A drop below 55% in Sydney or Melbourne would signal genuine pullback.
• Withdrawn auction numbers. Vendors pulling listings rather than meeting the market is a key softening signal.
• Pass-in to private sale conversions. The market has been quietly shifting toward private treaty all year. That trend will keep accelerating if buyer demand stays cautious.

The market hasn't fallen off a cliff. It's just no longer one market. If you can read your specific patch, you'll find better opportunities than the national headlines suggest.