May 2026 Market Update

The headlines will tell you the Australian housing market is slowing. The data tells you something more useful: it isn’t one market, and it isn’t all slowing. According to Cotality, national dwelling values were flat in May, no growth for the month, quarterly growth at 0.6% and annual growth easing to 8.8%. The combined capitals actually slipped 0.1% for the month. But that softness is concentrated, not broad. Cotality has Sydney down 0.9% and Melbourne down 0.8% in May, extending quarterly falls of 2.1% and 2.3% respectively. Strip those two out and most of the country is still rising, just at a slower rate. That is the two-speed reality the national average hides.

Perth sits firmly on the strong side of the divide. Cotality has Perth dwelling values up another 1.5% in May, taking quarterly growth to 4.8% and annual growth to 25.8%, the strongest annual result of any capital city in the country. The monthly pace has eased from April’s 2.1%, but the direction hasn’t changed. And it’s worth marking the milestone: on Cotality’s measure, Perth’s median dwelling value has now pushed past $1.05 million, a remarkable line to cross.

REIWA’s figures show a market that is changing shape but still clearly short of stock. Perth’s median house price rose to $920,000 in May, up 2.68% for the month, 5.75% for the quarter and 17.95% year-on-year. The bigger story is supply. Total listings climbed to 5,330 properties, up 27.45% on the month and 25.38% higher than the same time last year, the greatest choice buyers have had since 2024. But context matters: a balanced Perth market needs well north of 10,000 listings, so even after this lift, we’re still running at roughly half of “normal.”

Demand didn’t go anywhere. Around 685 sales were recorded in the final week of May, and while the sales-to-stock ratio eased to about 11% (from roughly 16% in April), that reflects more stock arriving rather than buyers leaving. Well-priced, well-presented homes are still being absorbed quickly, and days on market remain low by historical standards.

The rental market stays tight. Median house rents rose to $750 per week, up 2.74% for the month and 8.70% over the year, while unit rents held at $700, up 7.69% annually. With vacancy still low and population growth running hard, there’s no structural easing in rental pressure yet.

Within the City of Melville, the same forces show up. REIWA has the median house price at $1,592,500 in May, up 2.74% for the month, 5.46% for the quarter and 14.90% over the year. Days on market lifted slightly to 12 (from nine), and the sales-to-stock ratio eased to 39% from 53%. That’s softer absorption month-on-month, but off an exceptionally strong base and against a clear rise in available stock. REIWA recorded 145 listings across the City of Melville for the month, more stock, but no meaningful give in pricing for quality homes on good land.

Across MGP’s core local suburbs, realestate.com.au listings totalled 152 at month’s end:

Even with more coming to market, several of these pockets, Myaree at zero, plus Alfred Cove, Ardross and Booragoon, remain critically thin against the level of buyer demand still in the area.

This is where the read gets more interesting, because the macro backdrop has shifted and most local commentary is ignoring it. Here’s the current picture against the prior release.

Interest rates. The RBA lifted the cash rate 25 basis points to 4.35% at its May meeting, the third hike of 2026, up from 4.10%. The Board has signalled it now has room to pause and assess, and economists are split on whether the 16 June meeting delivers another rise or a hold. Either way, the cutting cycle is over for now but borrowing capacity is tightening, most visibly at the upper price points.

Inflation. Headline CPI eased to 4.2% in the year to April, down from 4.6% in March, but that fall was largely the temporary halving of the fuel excise, not a genuine cooling. The underlying trimmed mean actually ticked up to 3.4% (from 3.3%), its highest in over a year, and remains above the RBA’s 2-3% target. The headline looks better; the core looks stickier, which is exactly why another rate rise isn’t off the table.

Iron ore. WA’s economic engine is softening. The 62% benchmark slipped to around US$107 a tonne in early June, down roughly 3% from the start of May, on weak Chinese demand, high port inventories and new Simandou supply coming online. May still averaged a touch above April, but the trend is down. This is the single biggest variable to watch for Perth, because WA’s population and confidence cycles track the resources sector closely.

Jobs. National unemployment rose to 4.5% in April, up from 4.3% and the highest since 2021, with employment falling for the first time in months. A softening national labour market is a caution flag, even if WA remains comparatively strong.

Confidence. Consumer sentiment lifted to 83 in May (from 80.1) as the fuel shock faded, but households remain deeply pessimistic and homebuyer sentiment fell sharply, a reminder that the rate rises are landing.

Population. The structural support is still firmly in place. WA remains the fastest-growing state and Perth the fastest-growing capital, with migration that continues to outrun the housing pipeline.

Perth is not slowing the way Sydney and Melbourne are slowing. It’s transitioning out of the urgency-driven phase and into a more considered one. More stock means buyers finally have choice and a little breathing room; rising rates mean they’ll use it, especially above $1.5 million. But the core imbalance, too little supply, too many people, rents that won’t quit, hasn’t changed.

The clearest change on the ground this last month is foot traffic: home-open attendance has dropped considerably over the past month. We read that as buyer fatigue, not a change in fundamentals. Perth’s underlying drivers – undersupply, population growth and tight rentals – haven’t moved much over the last two months. What has changed is the noise: a rate hike, a federal budget, the Middle East/Iran conflict, fuel prices and a wall of polarising headlines, all of which weigh on confidence and turnout even when the fundamentals don’t budge. That fatigue may lift once the news cycle moves on but we’ll judge it against where the fundamentals actually sit then, rather than assume.

For sellers, scarcity is still your tailwind, but the market will no longer carry a lazy or ambitious price. It pays up for quality, not for “almost right.” For buyers, get finance-ready and decisive, because the right homes are still drawing competition even as average ones sit.