Cotality’s national home value index fell 0.4 per cent in September, marking a sixth consecutive monthly decline as higher mortgage repayments and tighter lending tests kept buyers on the sidelines across Sydney, Melbourne and the major regional capitals.
The September print left values 2.8 per cent below the April peak, a pace of decline that several bank economists said on Wednesday now resembles the early 1980s cycle when double-digit interest rates and a commodity price shock drained household wealth faster than wages could catch up.
Where the losses are concentrating
Inner-city apartments in Melbourne and Brisbane recorded the sharpest monthly drops, while Perth and Adelaide values were flat to slightly higher as interstate migration and tight rental markets continued to support prices in those cities. Cotality’s head of research told lenders on a briefing call that vendor discounting had widened to an average of 3.1 per cent nationally, up from 2.4 per cent in June.
Fixed-rate borrowers rolling onto variable products priced above 6 per cent dominated the finance data banks shared with brokers in the final week of September. Several lenders reported that pre-approvals were expiring before contracts exchanged, particularly for apartments with cladding remediation levies or owners corporation deficits flagged in strata searches.
What lenders and the RBA are watching
The Reserve Bank’s September financial stability chapter noted that household buffers remained higher than before the pandemic for many owner-occupiers, but that investors with interest-only loans faced larger repayment step-ups. APRA’s latest aggregate data showed new investor lending still below the 2021 peak, while first-home buyer activity ticked up modestly as state stamp duty concessions were adjusted in Victoria and New South Wales.
Construction cost inflation has cooled from its 2022 highs, yet completions remain uneven. Developers in south-east Queensland told Cotality surveyors that presale velocity on medium-density projects had slowed to an average of 1.8 units per week, down from more than three units per week at the same stage of the cycle two years ago.
Rentals still firm even as values slip
Despite falling sale prices, advertised rents nationally rose 0.3 per cent in September on Cotality’s rental index, keeping vacancy rates near record lows in several capital city postcodes. That divergence is pushing more households to delay purchasing while landlords who bought at peak prices face negative gearing positions that only improve if values stabilise or rents keep climbing.
Real estate agents in western Sydney said open-home attendance remained steady but offer volumes were thin, with many bidders seeking subject-to-finance clauses and longer settlement periods. Auction clearance rates in Melbourne dipped below 60 per cent for the third week in a row, a level agents associate with further modest price declines into the spring selling season.
Outlook into the December quarter
Economists at two major banks said in notes to clients that they expect national values to fall a further 3 to 5 per cent before mid-2027 unless the labour market weakens sharply or the RBA begins cutting earlier than their current forecasts. Others argued that constrained listings—owners reluctant to sell into a soft market—could limit the depth of any downturn even if demand stays muted.
For households, the practical effect is a widening gap between appraised equity and outstanding mortgage debt for recent buyers, particularly those who purchased with less than 20 per cent deposits in 2021 and 2022. Mortgage brokers reported a rise in inquiries about fixed-rate refinancing and debt-consolidation products, even as banks tightened credit policy on unsecured lines.
Cotality will publish October index results in four weeks, after auction data and private treaty sales through the Melbourne Cup week selling window are collected. Until then, agents said the market’s tone will be set by how many owners choose to list before Christmas rather than carry properties into 2027.