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Australian property values declined 1.1 per cent in September, marking the sixth consecutive monthly fall and leaving national values 5.2 per cent below their March peak. Higher interest rates, rising living costs, weaker consumer confidence and affordability constraints have reduced buyers' purchasing power, while increased housing stock and longer selling periods reflect weaker demand. Sydney, Melbourne and Brisbane have experienced particularly sharp declines, although low unemployment and limited new construction continue to support the market.
Australian property values have declined for the sixth month in a row as the cost of living takes its toll on buyers. The latest data from Cotality suggests widespread national downturn, rather than isolated declining regional markets.
Australian property values fell 1.1 per cent in September, dropping for the sixth consecutive month in a row as the national housing downturn continues to pick up speed. Cotality's latest home value index report shows overall property values are now 5.2 per cent lower than their March peak, with clearance rates faltering. Houses are sitting on the market for an average of 39 days across capital cities, up from 23 days a year ago.
The property market analysis firm's executive research director, Tim Lawless, said the downturn reflects a "combination of affordability constraints," including higher interest rates, elevated living costs, and weaker consumer sentiment. All of these have "reduced purchasing capacity and dampened buyer demand," Lawless said. , bringing the cash rate to 4.6 per cent, in a bid to tackle persistent inflation.
Australian Bureau of Statistics data shows that borrowers are now spending an average of roughly $4,500 per month to service a standard 30-year loan.
"Borrowers are not only facing higher mortgage costs, but also an extended period of elevated living expenses and negative real income growth," Lawless said. Your trusted source for staying up-to-date with the world around you. Get free daily news updates and analysis, straight to your inbox.
"Together, these pressures are narrowing the pool of buyers able to qualify for a mortgage and reducing the amount they can afford to pay. " Total advertised housing stock increased 23.1 per cent year-on-year, despite fresh listings entering the market, which dropped 9.2 per cent, as sales velocity declined. "The lift in available stock is improving choice for buyers, but ironically, many prospective buyers don't have the confidence or financial capacity to buy at the moment," Lawless said.
While the market first showed signs of a downturn in the capital cities of Melbourne and Sydney, the scope and scale of the shift has widened to include virtually every market in the country. In capital city suburbs, 97 per cent recorded a drop in dwelling values over the three months to the end of September. Every capital city recorded a monthly value fall in September, except Darwin, which rose 0.4 per cent.
In Sydney, housing values fell 1.4 per cent last month, and have dropped 8.6 per cent from their peak in February. The current pace of the decline is slightly faster than what was seen during the equivalent phase of the 2022-23 downturn.
"Sydney continues to lead the housing correction ... highlighting how rapid demand has weakened across the nation's largest housing market," Lawless said. Melbourne property values dropped 0.7 per cent in September and are down 7.2 per cent below their November 2025 peak. In regional areas, 71 per cent of local sub-markets dropped over the last month, falling 0.7 per cent.
However, regional values remain 5.6 per cent higher annually. Brisbane saw the sharpest fall of all capital cities in September, dropping 1.5 per cent, outpacing Sydney's decline.
"The result highlights how sharply conditions have shifted in what had previously been one of the strongest performing housing markets," Lawless said. Brisbane has overtaken Sydney as the capital city with the fastest declining property prices last month. Source: AAP / Jono Searle Sales volumes have fallen the fastest in major cities which were previously growth leaders in the market. Brisbane is down 27.2 per cent, with Sydney just behind on 26.5 per cent and Perth at 24.2 per cent.
In mid-sized cities, the decline was less pronounced. Perth's home values have dropped 1.2 per cent over the past month while Adelaide fell 1.3 per cent. While the market is largely being driven by economic conditions, the Cotality report identifies changes to negative gearing and capital gains tax arrangements as having added "another layer of downside risk".
However, high construction costs, driven by inflationary pressures and labour force tightness, continue to suppress new housing supply, stabilising the market. Low unemployment rates are also preventing widespread selling, the report finds. Speaking to ABC News on Thursday morning, Lawless said the property market is a buyer's market without buyers.
"Seller numbers are right down and I think that this really reflects the confidence in the housing market and the broader economy and cost of living pressures and high interest rates," he said. "So for now, even though it is a buyer's market, the missing piece of the puzzle is actually buyers.
" Lawless pointed to the federal budget as having sent "a shudder" through the housing market, something Labor has frequently denied, and said that even bargain-hunters are staying away out of expectation that the market will continue to decline until interest rates drop. The country's four largest trading banks all predict that interest rates will remain at their current level, if not higher, with the cycle starting to come down well into next year.
"It's pretty clear that headwinds facing demand are outweighing those supply-side challenges," Lawless said. "That will be the case, I think, for at least going into 2027 — probably around the middle of next year. "Sign up now for daily news from Australia and around the world. You can also subscribe to Insight's weekly newsletter for in-depth features and first-person stories.
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