Property News
Cotality's Home Value Index for September 2026 delivered a sixth consecutive monthly fall, and the detail underneath is what matters most for borrowers. Over the three months to the end of September, home values declined in 97 per cent of capital city suburbs. In other words, there is now almost nowhere in the capitals where values are rising.
That breadth changes the conversation. A downturn that is confined to a few expensive pockets is a story about those pockets. One that reaches nearly every suburb touches first home buyers, upgraders, investors and anyone thinking about refinancing, wherever they live.
Cotality's national index fell 1.1 per cent in September. It now sits 5.2 per cent below the March 2026 peak and is roughly flat over the past year. Cotality research director Tim Lawless has pointed to the 97 per cent figure as evidence of how broad-based this negative cycle has become, and attributes it to affordability constraints, higher interest rates and weaker consumer sentiment.
The monthly picture is now weak almost everywhere, but the annual picture still splits the country in two.
| City | September change | Annual change | Median value |
|---|---|---|---|
| Sydney | -1.4% | -7.0% | $1,198,596 |
| Melbourne | -0.7% | -6.2% | About $781,000 |
| Brisbane | -1.5% | +5.9% | $1,048,880 |
| Perth | -1.2% | +10.1% | $975,022 |
| Darwin | +0.4% | Higher than a year ago | Not reported here |
Source: Cotality Home Value Index, September 2026. Adelaide and Hobart also remain higher than a year earlier. Darwin was the only capital to record a monthly gain.
For most of the past year, the story was one of divergence. Sydney and Melbourne corrected first, while Perth, Brisbane and Adelaide kept setting records. September narrows that gap. Brisbane recorded the steepest monthly fall of any capital at 1.5 per cent, and Perth dropped 1.2 per cent, even though both are still well ahead of where they were twelve months ago.
The common thread is the cost of borrowing. With the RBA cash rate at 4.60 per cent after four increases this year, the amount a household can borrow has shrunk by tens of thousands of dollars. Cotality estimated the average reduction at about $90,000 this year. When borrowing capacity falls, the pool of buyers who can meet the asking price falls with it, regardless of the postcode.
Cotality expects values to keep falling into 2027, although low housing supply and a resilient labour market should limit the damage. Separate analysis of the RBA's recent commentary indicates that fewer than 1 per cent of borrowers are in negative equity, so forced selling has not yet become a feature of this cycle.
Falling prices help on the deposit side, but a higher rate and a lower borrowing ceiling work in the other direction. The practical benefit is negotiating power. Vendors are discounting, listings are sitting longer, and buyers with a pre-approval that still holds can often secure a better price than six months ago. It is worth confirming with your broker that your approval has been reassessed at current rates.
If you are selling and buying in the same market, a falling market cuts both ways. Your sale price is lower, but so is the price of the home you want. The risk is timing: settling a purchase before your sale completes can require bridging finance, and lenders are more cautious when values are uncertain. Valuations matter more than usual right now, because a valuer may come in below the contract price.
Lower values and rising rents are a different proposition for investors than a year ago. Yields have been improving while prices soften, though higher interest costs still weigh on cash flow. Investors should also keep in mind APRA's debt-to-income limit, which allows up to 20 per cent of a bank's new lending to be at six times income or more, and which can bite for investors with several existing loans.
The loan-to-value ratio is where a falling market quietly affects borrowers who have done nothing wrong. Many lenders price their best rates for loans at or below 80 per cent of the property value, and require lenders mortgage insurance above that threshold when a new loan is taken out.
Consider a borrower with an $800,000 loan on a home that was worth $1,000,000 at the March peak, a loan to value ratio of 80 per cent. A 5.2 per cent fall takes the value to about $948,000 and lifts the ratio to roughly 84 per cent. A 7 per cent fall, in line with the annual decline in Sydney, takes the value to $930,000 and the ratio to 86 per cent. The loan has not changed, but the borrower has lost access to the sharpest refinance pricing.
Several options are worth exploring before assuming that refinancing is off the table:
Our Rate Check compares your current rate against what is available today, so you can see whether a review or a refinance is worth pursuing.
The next Cotality release in early November will show whether the sixth monthly fall was the start of a plateau or a further step down. The RBA's Melbourne Cup Day meeting, along with the September quarter inflation result, will shape expectations for the cash rate and, in turn, for borrowing capacity through summer.
For borrowers, the sensible response to a broad downturn is not panic and not paralysis. It is a review of your numbers: your repayments at current rates, your equity position, and your options if rates move again. A downturn this widespread is also the point where good preparation separates those who can act on opportunities from those who cannot.
Cotality measured the change in values across capital city suburbs over the three months to the end of September 2026, and found that almost all of them recorded a decline. It does not mean every property fell by the same amount. Falls have been steeper in Sydney and the upper end of the market, and milder in some more affordable pockets. It does indicate that the downturn is no longer confined to a few cities or price brackets.
It depends on your circumstances rather than on trying to pick the bottom. Buyers currently have more negotiating power, more stock to choose from and less competition at auctions. Against that, borrowing capacity is lower than it was a year ago and Cotality expects further falls into 2027. If you plan to hold the property for many years, can comfortably meet repayments at a higher rate and have a deposit buffer, buying can still make sense. A broker can stress test your repayments before you commit.
Yes, in most cases. A lower valuation raises your loan to value ratio, which may push you above 80 per cent and limit access to the lowest rates, or trigger lenders mortgage insurance with some lenders. Lender policies differ on valuations, maximum LVR and pricing, so a comparison across a broad panel is valuable. If the gap is small, a rate review with your current lender or a modest extra repayment can sometimes bring you back under the threshold.
Disclaimer: This article is general information only and does not constitute financial, mortgage, or credit advice. Figures are drawn from Cotality's Home Value Index for September 2026 and public commentary, and may be revised. Before making any decision about buying, selling, refinancing or restructuring a loan, you should speak with a qualified mortgage broker or financial adviser who can assess your specific situation. Mankin Finance Pty Ltd holds Australian Credit Licence 389087.
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