There are several factors working together.
1. Higher interest rates
The RBA has raised interest rates three times in 2026, reducing borrowing capacity.
This is one of the strongest reasons for the slowdown.
2. Affordability
After several years of strong price growth, Australian houses have become extremely expensive relative to household income.
Higher mortgage repayments are therefore reducing the maximum price buyers can pay.
3. Investor demand is weakening
Changes to property-investment taxation are affecting investor sentiment and demand for established properties. PropTrack specifically identifies the tax changes as one factor weighing on buyer demand.
4. Buyers are becoming cautious
Falling prices can create a psychological problem:
“Why should I buy today if prices could be lower next month?”
That can cause buyers to wait, which further reduces transaction volumes.
5. Mortgage demand is falling
Recent reporting indicates that mortgage applications have fallen substantially, particularly among property investors.
6. Inflation remains a problem
Australia’s July 2026 inflation rate was 3.5%, while underlying inflation remained elevated, increasing the possibility of another RBA rate increase.
This is an important risk for the property market.