September 2026
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Housing downturn spreads as 93% of capital city suburbs record winter value falls
Home value declines spread sharply across Australia’s housing market through winter, with home values falling across 93% of capital city suburbs and every capital city except Darwin recording a decline over the past three months.
Cotality’s national Home Value Index fell 0.9% in August, marking a fifth consecutive month of decline and taking national home values 3.6% below the market peak recorded in March.
Tim Lawless, Cotality’s Research Director, said the latest figures show the downturn is no longer confined to select markets or higher-value segments. “What started as a more concentrated easing across higher-value segments has now become a much more generalised softening, with the vast majority of capital city suburbs recording some level of decline.”
“Sydney continues to lead the downturn,” Mr Lawless commented. “The combination of a sharp drop in demand and higher than average advertised stock levels is weighing more heavily on Australia’s largest housing market.”
Melbourne, Canberra (both -1.1%) and Brisbane (-1.0%) are the only other capitals to record a decline of one per cent or more in home values over the month. Still, the other mid-sized capitals aren’t far behind, with Adelaide and Perth home values dropping 0.8% in August.
This weaker phase of the housing downturn has been largely driven by declining demand, with Cotality’s quarterly estimate of home sales tracking 15.5% lower than at the same time last year and 11.5% below the five-year average.
As demand has weakened, homes are taking longer to sell and listings have accumulated. Across most capital cities, advertised supply is now tracking well above both year-ago and five-year average levels. Over the four weeks ending August 30, capital city listings were 24% higher than a year ago and 8% above the five-year average.
Capital city suburbs record winter value falls
RBA flags more rate hikes
Major banks are now factoring in rate hikes in both September and November after Reserve Bank of Australia (RBA) deputy governor Andrew Hauser told the ABC that inflation and growth were too high.
Hauser said the board would leave its decision on the cash rate until the 11th hour when it meets on September 28, given the inflation figures come out the day after.
“Clearly house prices are falling,” he said. “Consumers are very unhappy, frankly. Consumer confidence is low.”
AMP chief economist Shane Oliver says two further rate hikes this year could tip the economy into recession and force house prices down by up to 15 per cent.
Commonwealth Bank senior economist Belinda Allen says rate increases in both September and November are now on the cards as the central bank attempts to bring inflation under control.
“Despite growth slowing in line with expectations, inflation remains too high and is proving more persistent than we had expected,” she says.
Australian consumer prices, a key measure of inflation, rose more than expected in July as fuel and travel costs increased, adding to the risk of further rate hikes.
Turning to the impact of more rate hikes on the property market, Allen says she expects a “peak to trough” decline of 9 per cent.
“The budget tax changes continue to dampen investor sentiment, and the additional interest rate hike in our forecasts will keep prices depressed,” she says.
Mortgage holders brace for Christmas pain as RBA flags more rate hikes
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