May 2026 Australian Property Month in Review
The Australian property market has had a lot to digest over the past few weeks.
On 5 May, the Reserve Bank lifted the cash rate by 25 basis points to 4.35 per cent, marking the third consecutive increase this year, effectively unwinding the relief delivered by last year’s cuts. Governor Michele Bullock’s message was unambiguous: the Board left the door open to further action, flagging second-round inflation risks and making plain it will do whatever is necessary to bring inflation to heel.
Then on 12 May, Treasurer Jim Chalmers handed down the Federal Budget, and for property investors, it was significant. Those purchasing established residential properties after Budget night will lose access to negative gearing from 1 July 2027, with the benefit preserved only for new builds, and grandfathered for established investments already held. The 50 per cent capital gains tax discount has been replaced with cost-based indexation and a 30 per cent minimum tax rate. The stated aim is to redirect investor appetite toward new supply and rebalance opportunities for first-time homebuyers to enter the market. There is, however, genuine concern that reducing the attractiveness of established investment property will further tighten rental supply, which is the opposite of what a housing-stressed nation needs. In fact, an extensive survey of property experts conducted by our firm revealed that approximately 84 per cent did not expect the Budget to deliver meaningful improvements to housing supply or affordability outcomes nationwide.
The twin pressures of rates and federal policy are landing in a market already running at varied speeds. Perth, Brisbane and Adelaide continue to perform well, underpinned by chronic undersupply and population growth. Sydney and Melbourne are softening, with values levelling off and buyer caution more pronounced at the upper end. The common thread remains the supply deficit. Australia is not building enough dwellings to meet demand, and many believe the Budget’s $2 billion Local Infrastructure Fund will not move the needle quickly enough.
Layered atop the domestic picture is a global backdrop that refuses to settle. Conflict in the Middle East is pushing energy costs higher and driving inflationary pressure that the RBA cannot ignore. For agricultural markets, the Iran conflict’s impact on trade through the Strait of Hormuz is affecting diesel and fertiliser prices, a dynamic that is directly influencing grower decisions and rural land economics.
Against this backdrop, the May edition of Month in Review cuts through the noise with on-the-ground intelligence from our teams.
In our residential section this month, we answer the question, “What does the median price actually buy?” Our experts take a location-by-location look at what “the median” means on the ground, anchoring the conversation in what buyers are genuinely getting for their money today.
Our commercial specialists turn the spotlight on their industrial sectors. Our national overview captures a market in transition: prime assets command strong rents while older secondary stock faces pressure, and feasibility remains constrained by construction costs, land scarcity and financing. From multi-storey warehouses in Sydney’s inner south to the AUKUS-driven push in South Australia, there is considerable geographic diversity to navigate.
Rural submissions this month focus on the cotton sector. This is a significant broadacre crop navigating weather variability, input cost pressure and global trade disruption. Our experts provide a frank assessment across the key growing regions, from the Darling Downs to the Northern Territory’s emerging cotton country.
The breadth and quality of analysis in this edition reflect what our people do best – provide independent, authoritative advice grounded in real market experience.
Peter Maloney
CEO
Herron Todd White
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