Market Update
For most of 2026, regional Australia has been the bright spot in a weakening national market. That cushion is now thinning. Cotality's October data shows regional dwelling values falling over the quarter in most states, while the number of homes changing hands has dropped sharply.
The national result is the backdrop: the Cotality Home Value Index fell 1.2% in October to a median of $884,855, the seventh consecutive monthly decline and 6.7% below the March 2026 peak. The Reserve Bank lifted the cash rate to 4.85% on 3 November. For regional borrowers, upgraders and investors, the question is whether the regions are simply catching up with the capitals.
According to Cotality's latest figures, as reported by the Canberra Times, the declines are concentrated in the larger eastern markets. Regional Queensland recorded the sharpest quarterly fall, while regional South Australia was the only region to edge higher.
| Regional market | Quarterly change in dwelling values (Cotality, October 2026) |
|---|---|
| Regional Queensland | -2.7% |
| Regional NSW | -2.1% |
| Regional Victoria | -1.5% |
| Regional WA | -1.2% |
| Regional Tasmania | -0.2% |
| Regional South Australia | +0.1% |
The shift is notable because the gap between regions and capitals had been a feature of the year. In September, Cotality's data showed regional values still up 5.6% annually while the combined capitals were down 1.8%. By October the regional annual gain had narrowed to 3.4%.
Price indices lag activity. Cotality's modelling shows regional home sales over the past three months were 23% below the same period a year earlier and 18% below the five-year average. When fewer buyers are transacting, the sales that do occur carry more weight in setting prices, and a thin market can move quickly in either direction.
Cotality research director Tim Lawless has described the most likely outcome as a gradual drift lower in values rather than a sharp correction, with the path depending on inflation, interest rates and the jobs market.
That framing matches what we see at the broker desk. Sellers who priced for the 2025 market are adjusting, but there is no panic selling, and borrowers with stable incomes are still being approved.
The Mortgage and Finance Association of Australia estimates full pass-through of the November rise adds about $119 per month on the national average new owner-occupier loan of $731,000. Regional loans are typically smaller, but the effect on household budgets is similar, because regional incomes are often lower as well.
The more important mechanism is borrowing power. Higher rates reduce what lenders will assess you for, which narrows the pool of buyers in every market, regional or otherwise. Fewer qualified buyers means longer selling times, and that is precisely what the sales data is capturing.
A lower valuation raises your loan-to-value ratio even if your balance has not moved. Take a $480,000 loan on a home that has slipped from $600,000 to $540,000: your LVR moves from 80% to about 89%. That matters if you plan to refinance, because above 80% many lenders add lenders mortgage insurance on a new loan or limit their best rates.
If you are selling in a regional area and buying in a capital, or the reverse, both sides of the transaction are softening. Bridging finance and sale timing need careful planning, and buyers who need to sell first should allow longer than they would have a year ago.
Regional yields have been a drawcard, but a falling market tests the equity buffer. Investors should stress-test cash flow at current rates and confirm that a drop in value will not breach lender covenants on cross-collateralised loans.
Slower sales can mean more room to negotiate and a longer window to conduct due diligence. Government schemes such as the Home Guarantee Scheme can reduce the deposit required, though buyers still need to be comfortable with repayments at 4.85%.
Compare up to three loan structures side by side and see the monthly repayment and total interest for each scenario.
Three practical steps are worth taking regardless of where you live. First, ask your broker for a current estimated LVR so you know where you stand before any refinancing decision. Second, stress-test your budget at least 1.0 percentage point above your current rate. Third, if you are buying, get a formal approval in place before you start inspecting, so you can act when the right property appears and negotiate with confidence.
Lender policy also varies by postcode. Some lenders apply tighter maximum LVRs or smaller loan limits in certain regional areas, and that is a difference a broker can navigate across our panel of lenders.
No. Cotality's October data showed regional Queensland down 2.7% over the quarter, regional NSW down 2.1%, regional Victoria down 1.5% and regional WA down 1.2%, while regional South Australia rose 0.1% and regional Tasmania slipped 0.2%. Regional values are still about 3.4% higher than a year ago, so the picture varies sharply by state and by town.
Yes. Lenders revalue properties using their own valuation models, and a lower value raises your LVR even if your loan balance has not changed. A borrower with a $480,000 loan on a property that has slipped from $600,000 to $540,000 moves from 80% to about 89% LVR, which can affect refinancing options and whether lenders mortgage insurance applies on a new loan.
Slower sales and longer selling times can give prepared buyers more negotiating room, but a 4.85% cash rate and softer values mean buyers should stress-test repayments and keep a buffer. The right answer depends on the town, your deposit, your income stability and how long you plan to hold. A broker can model your borrowing capacity across several lenders before you commit.
Disclaimer: This article is general information only and does not constitute financial, mortgage, or credit advice. Figures are drawn from published Cotality data as reported by media outlets and may be revised. Before making any changes to your loan, you should speak with a qualified mortgage broker or financial adviser who can assess your situation. Mankin Finance Pty Ltd holds Australian Credit Licence 389087.
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