How Far Have Home Values Fallen Since the March Peak?
Cotality’s Home Value Index fell 0.9% in August, leaving national values 3.6% below their March peak and 3.1% lower over the past three months Cotality. The national median dwelling value now sits at $912,885. Every capital except Darwin recorded a fall, and 93% of capital city suburbs lost value over winter, more than double the share recorded in autumn Broker Daily.
Sydney led the decline with a 1.4% monthly fall and is now 7.1% below its February peak, followed by Melbourne and Canberra at 1.1% and Brisbane at 1.0%. Cotality’s Tim Lawless described the shift as “a much more generalised softening, with the vast majority of capital city suburbs recording some level of decline,” and said demand is likely to remain subdued through spring.
Supply is building as buyers hold back. Total capital city listings were 24% higher than a year earlier over the four weeks to 30 August, while the median time to sell stretched to 33 days from 26 a year ago and the average vendor discount widened to 3.9%. For buyers with finance in place, those conditions mean more choice and more room to negotiate than at any point in the past few years.
Why Is Housing Affordability at a Record Low While Prices Fall?
A household earning the median income of about $125,000 could afford only 12% of homes sold nationally in the 2026 financial year, according to realestate.com.au’s Housing Affordability Report, the lowest share since records began in 1995 Australian Broker. The previous low of 14% was set during the global financial crisis. Repayments on a median-priced home now take 35.5% of average household income, the highest share since 1989.
The explanation is timing. Prices have fallen a few per cent from their peak, but they rose far faster than incomes over the past five years, and three rate rises this year have reduced how much any given income can borrow. South Australia overtook New South Wales as the least affordable state, with repayments taking 43.9% of income, while Victoria became the most affordable state for the first time since records began.
Does a falling market make it easier for first home buyers to get in?
It can help on price and negotiation, but borrowing capacity often matters more. A buyer whose pre-approval was issued before this year’s rate rises may find the lender now assesses a smaller maximum loan. Checking the current figure with a broker before bidding avoids finding the gap after an offer is accepted. Schemes such as the 5% Deposit Scheme can reduce the deposit needed, and our first home buyer page covers how those work.
What Does the June Quarter GDP Result Mean for Rates?
The economy grew 0.4% in the June quarter and 2.1% over the year, with household consumption also up 0.4% and the household saving ratio edging up to 6.5% Australian Broker. ABS head of national accounts Grace Kim said “economic growth remained subdued in the June quarter as households continued to behave cautiously.” GDP per capita was flat for the quarter.
Subdued growth has not changed the bank forecasts. NAB, CBA and ANZ all expect the cash rate to rise to 4.60% before the end of the year, while Westpac still expects no change for the rest of 2026. The next RBA decision is due on 29 September, after the August inflation and labour force figures.
Is Mortgage Lending Slowing Down?
APRA data showed banks’ home loan books grew just 0.2% in July, the slowest monthly pace in three years, taking total system lending to $2.51 trillion Australian Broker. Investor lending rose only 0.1%, the smallest monthly increase since February 2024, and owner-occupier lending grew 0.3%. Three of the major banks have reported falls of between 15% and 20% in new applications since the May Budget.
Listings data points the same way. SQM Research counted 269,717 homes for sale in August, 12.8% more than a year earlier, and distressed listings rose 10% year on year to 4,510 Australian Broker. Brisbane listings were 26.5% above August 2025, the largest annual rise of any major capital. Distressed stock remains a small share of the total, but managing director Louis Christopher said “the direction of travel has clearly changed compared with earlier in the year.”
Key Takeaways
- •National home values fell 0.9% in August, the fifth straight monthly fall, and are 3.6% below their March peak.
- •93% of capital city suburbs recorded a fall in value over winter, with Sydney now 7.1% below its February peak.
- •A median-income household could afford only 12% of homes sold in the 2026 financial year, the lowest share on record.
- •The economy grew 0.4% in the June quarter, and three of the four major banks still expect the cash rate to reach 4.60% this year.
- •Home loan books grew 0.2% in July, the slowest monthly pace in three years, with investor lending up just 0.1%.
- •Distressed listings rose 10% over the year to 4,510, and Brisbane listings are up 26.5% on a year ago.