What Happened This Month
Cotality’s Home Value Index fell 1.1% in September and 3.7% over the quarter, leaving the national median dwelling value at $899,236 [Cotality]. Combined capital city values fell 1.2% in the month and are 6.4% below their peak, while regional values fell 0.7% and are still 5.6% higher than a year ago. Cotality’s Tim Lawless said “inventory levels have risen sharply because the rate of sale has fallen even faster.”
Sales activity explains much of the decline. Estimated home sales over the three months to September were 19.1% lower than a year earlier and 13.3% below the five-year average, while total capital city inventory was 23.1% higher. Homes took a median 39 days to sell, up from 23 a year ago, and the median vendor discount widened to 4.2%. The RBA’s rate rise came on top of that, with the Board saying “some of the upside risks flagged in August are materialising” [RBA].
Sydney: 8.6% Below Its Peak
Sydney values fell 1.4% in September and 4.9% over the quarter, and are down 7.0% over the year to a median of $1,198,596. The city is now 8.6% below its February peak, and Cotality noted that “Sydney continues to lead the housing correction.” Houses fell 1.6% in the month and units 1.0%.
Sales volumes over the three months to September were 26.5% lower than a year earlier, one of the steepest falls in the country. Buyers who remain active have more listings to choose from and more time to negotiate than at any point since the pandemic upswing.
Melbourne: A Smaller Monthly Fall
Melbourne values fell 0.7% in September, a smaller decline than most capitals, and 3.4% over the quarter, leaving the median at $780,550 and values 6.2% lower over the year. The city is 7.2% below its November 2025 cyclical high and 7.5% below its March 2022 record. Units held up better than houses, down 0.3% against 0.9%.
Melbourne’s flat run over recent years leaves values relatively low against incomes, which has helped it outperform Sydney on a monthly basis. Rental conditions have also eased, with SQM Research’s vacancy rate at 1.8% in August.
Brisbane: The Sharpest Monthly Fall
Brisbane recorded the largest monthly fall of any capital in September, down 1.5%, and is 4.7% lower over the quarter and 5.4% below its May peak. Values are still 5.9% higher than a year ago, with a median of $1,048,880, but the city’s sales volumes fell 27.2% on a year earlier, the steepest decline of the capitals.
Auction results show the shift in sentiment. Brisbane’s preliminary clearance rate on the first weekend of October was 25.6%, well below Sydney and Melbourne, and listings in the city were around 43% higher than a year earlier according to SQM Research [SQM Research]. For buyers with finance ready, Brisbane now offers more negotiating room than it has for several years.
Perth: Correcting After the Boom
Perth values fell 1.2% in September and 4.7% over the quarter, leaving the city 6.0% below its April peak with a median of $975,022. Annual growth has slowed to 10.1%, still the second strongest of the capitals. Units fell 1.4% in the month, slightly more than houses, and sales volumes were 24.2% lower than a year earlier.
The rental market remains the tightest in the country among the large capitals, with SQM’s vacancy rate at 0.6% in August, which continues to underpin investor demand.
Adelaide: Slowing From a High Base
Adelaide values fell 1.3% in September and 2.7% over the quarter, leaving the median at $928,560 and values 2.9% below their May peak. Annual growth remains 6.5%. Adelaide’s vacancy rate of 0.6% means rents continue to rise even as values ease.
Smaller Markets: Hobart, Darwin and Canberra
Darwin was again the only capital to record a monthly rise, up 0.4% in September to a median of $633,431, and is 11.9% higher over the year. Its gross rental yield of 6.5% remains the highest in the country. Hobart fell 0.5% in the month and 1.2% over the quarter, with values 7.0% higher over the year at $741,496.
Canberra fell 1.1% in September and 3.2% over the quarter, leaving values 1.6% lower over the year at a median of $861,744. Its vacancy rate rose to 2.1% in August, the loosest of any capital.
| City | Median value | Quarterly | Annual |
|---|---|---|---|
| Sydney | $1,198,596 | -4.9% | -7.0% |
| Brisbane | $1,048,880 | -4.7% | +5.9% |
| Perth | $975,022 | -4.7% | +10.1% |
| Adelaide | $928,560 | -2.7% | +6.5% |
| Canberra | $861,744 | -3.2% | -1.6% |
| Melbourne | $780,550 | -3.4% | -6.2% |
| Hobart | $741,496 | -1.2% | +7.0% |
| Darwin | $633,431 | +0.5% | +11.9% |
| National | $899,236 | -3.7% | 0.0% |
Rental Market Snapshot
Rents rose 5.5% over the year to September, down from 5.7% in August, according to Cotality, and the national gross rental yield climbed to 3.85%, the highest since August 2019. SQM Research’s national vacancy rate held at 1.3% in August, with asking rents averaging $701.53 a week. SQM managing director Louis Christopher cautioned that the 7.3% annual increase in asking rents “is history. It reflects increases that have already stopped.”
The rental market is starting to split. Canberra, Melbourne and Sydney have the most available stock, while Darwin, Perth, Adelaide and Hobart remain extremely tight. Higher yields have improved investor cash flow at the margin, but the September rate rise has pushed borrowing costs up again.
Lending and Finance Trends
Housing credit grew 0.4% in August and 7.3% over the year, while business credit grew 10.9%, according to the RBA’s financial aggregates [RBA]. Investor credit growth has slowed sharply since the May Budget changes to negative gearing and capital gains tax for established properties, and lenders have shifted their attention toward business lending.
New supply is also slowing. Dwelling approvals fell 6.1% to 16,953 in August, with Queensland apartment approvals dropping from 1,330 to 337 [ABS]. The RBA’s Financial Stability Review found most mortgage holders “remain well placed” even if prices fall sharply, with fewer than 2% of variable rate owner-occupiers facing a cash flow shortfall [RBA]. Borrowers looking to reprice or refinance after the rate rise face tighter serviceability and lower valuations than a year ago.
What to Watch Next Month
The RBA’s next decision is on 3 November, with the September quarter inflation figures due in late October and the September labour force data in mid-October. August’s monthly inflation figure jumped to 4.0% [ABS], and some major bank economists expect a further rise to 4.85%, while others expect the cash rate to hold at 4.60%.
October is also the first month in which most variable rate borrowers will see higher repayments from the September rise, after lender notice periods. Spring auction results, particularly in Brisbane, Adelaide and Perth, will show whether buyers are absorbing the extra stock or whether vendors need to adjust further.
Property moves in cycles, and periods like this tend to separate short-term noise from long-term fundamentals. Population growth, tight rental markets and slowing construction all point to underlying demand that has not gone away. For buyers with secure finance and a long time horizon, falling values, longer selling times and wider vendor discounts change the negotiating position in their favour, while the structure of the loan and the buffer it leaves matter more than trying to pick the exact bottom.
Key Takeaways
- •National home values fell 1.1% in September, the sixth straight fall, and are 5.2% below their March peak.
- •97% of capital city suburbs lost value over the three months to September, and sales were 19.1% lower than a year ago.
- •Brisbane recorded the sharpest monthly fall at 1.5%, while Darwin was the only capital to rise.
- •The RBA lifted the cash rate to 4.60% on 29 September, and its next decision is on 3 November.
- •Rents rose 5.5% over the year and the national gross rental yield reached 3.85%, the highest since August 2019.
- •Housing credit grew 7.3% over the year to August, while dwelling approvals fell 6.1%.