Cotality property analytics data is soon expected to show national dwelling values fell in June after the federal budget's changes to negative gearing and the capital gains tax discount.
The modifications have accelerated an existing downturn in Melbourne, Sydney and Canberra.
Borrowing costs were already rising before the budget, but investors have since increasingly abandoned the property market.
Prices were likely to fall back the most in established suburbs, Challenger chief economist Jonathan Kearns said.
"An investor trying to sell an existing investment property is going to find less of a demand there ... so the key is actually going to come in the prices in those locations," he told AAP.
AMP chief economist Shane Oliver has forecast national home values to fall 0.3 per cent in June, led by a 1.2 per cent drop in Sydney and a 0.9 per cent dip in Melbourne.
RBA credit data on Monday could show signs of a slowdown in investor housing lending, he said.
While the budget was having a positive impact on housing affordability, the government's efforts to boost dwelling supply are still falling short.
Building approval figures for May, set for release by the Australian Bureau of Statistics on Wednesday, will show Australia falling further behind its goal to build 1.2 million new homes by mid-2029.
Only 16,710 dwelling consents were handed out in April, well short of the 20,000 required.
"Given what's going on with interest rates and housing prices, you'd expect approvals are going to drop away from here, not continue to increase," Dr Kearns said.
"It's not looking good for boosting housing supply to make housing more affordable."
The rising cost of building materials due to the war in the Middle East and threat of more Reserve Bank rate hikes could further constrain the construction pipeline.
Dr Kearns, a former RBA official, said inflation and employment data released in the past week didn't make the picture any clearer and there was a reasonable chance of another interest rate hike in August.
But Treasurer Jim Chalmers was bullish on the outlook for inflation, saying the government now expected it to peak at about 4.25 per cent in the current financial year - rather than the five per cent predicted in May's budget.
However, Australia needed the ceasefire between the US and Iran to stick to help keep the oil price down and broader inflationary pressures at bay, he told the ABC's Insiders program on Sunday.
Headline inflation for the year fell to four per cent in May, although core inflation - which strips out volatile items - edged up to 3.6 per cent.
Following the release of the figures and strong employment data, money markets are pricing the chance of an August rate hike at around one in five.
The chance of a hike by Christmas is being priced at about 40 per cent.
Minutes from the bank's last meeting in June, when it held the cash rate steady at 4.35 per cent, will be released on Tuesday.
Wall Street investors have meanwhile diverted their attention from artificial intelligence-related chip stocks to healthcare amid concerns over volatility.
The S&P 500 declined 0.05 per cent ​to end Friday at 7,353.95 points, the Nasdaq declined 0.24 per cent to 25,297.62 points and the Dow Jones slipped 0.09 per cent to 51,876.11 points.
Australian share futures edged up 16 points, or 0.18 per cent, to 11,807.
The benchmark S&P/ASX200 index rose 15.5 points, or 0.18 per cent, to 8,764.2 on Friday, while the broader All Ordinaries gained 12.6 points, or 0.14 per cent, to 8,964.2.
10°C