Nowhere to hide as property prices tank around the country
The housing market is moving deeper into correction territory and has erased the annual price gains that had accrued earlier in the year and late last year.
A sixth consecutive month of property prices declines was notched up in September and with interest rates rising and inflation still rampant there’s little reason to expect a reversal to be imminent.
Depending on your choice of monthly data source, prices declined nationally over the past month by 1.1 per cent (Cotality’s Home Value Index) or by 0.2 per cent (realestate.com.au’s PropTrack-powered index).
Whichever way you slice and dice it, unless your property is in Darwin it’s almost certainly declined in value.
There’s seemingly nowhere to hide or to locate capital growth buying opportunities.
Tim Lawless, Cotality’s Research Director, noted that almost every capital city suburb was down in value over the past three months.
“There was 97 per cent of capital city suburbs down in value over the three months to end of September, highlighting the broad-based scope of this negative housing cycle.”
Brisbane recorded the sharpest monthly decline among the capital cities in September, with values falling 1.5 per cent, narrowly exceeding Sydney’s 1.4 per cent decline, according to Cotality.
The result highlights how quickly conditions have changed in what had previously been one of Australia’s strongest-performing housing markets.
Melbourne recorded a more moderate 0.7 per cent decline for the month, with values falling less than in each of the mid-sized capitals, where declines exceeded 1 per cent.
Sydney remains at the centre of the national correction, with dwelling values now 8.6 per cent below their February peak. The decline is marginally deeper than at the equivalent stage of the 2022–23 downturn, underscoring the speed at which demand has weakened across the country’s largest housing market.
Melbourne values are now 7.2 per cent below their cyclical high reached in November last year and 7.5 per cent below the record set in March 2022.
Exacerbating the downturn, the latest inflation figures released by the Australian Bureau of Statistics on Wednesday (30 September) point towards a prolonged struggle to tackle inflation.
The Consumer Price Index (CPI) rose 4.0 per cent in the 12 months to August 2026, up from 3.5 per cent in the 12 months to July.
The fact housing, up 5.7 per cent, was the biggest contributing factor will only add salt to the wounds of borrowers wrestling with the subsequent soaring of interest rates.
Transport was the second largest contributor to annual inflation in August, rising by 5.6 per cent due to higher automotive fuel prices.
Given the inability of higher interest rates to obviate the need for people to drive, and housing costs rising for a multitude of reasons, it’s difficult to see how higher interest rates are going to materially suppress the root causes of the current burst of inflation.
Satirical Perth website, the Bell Tower Times, neatly encapsulated the sentiment of many borrowers, with its tongue-in-cheek headline, RBA urges mortgage holders to stop blocking the Strait of Hormuz if they want interest rates to drop.
Broad-based and entrenched declines
The breadth of the downturn is probably the most significant feature of the September numbers.
This is no longer a story confined to Sydney’s prestige suburbs or the more heavily leveraged end of the market. Brisbane, Perth and Adelaide are now joining the correction in a much more meaningful way.
There is, however, still a reasonably large gap between falling prices and a housing market in outright distress.
Eleanor Creagh, realestate.com.au senior economist, said further falls were likely as higher borrowing costs, this week’s rate rise and tax changes continue to work their way through the market. But she did make some important qualifications.
“This remains an orderly adjustment rather than a distressed housing correction,” Ms Creagh said, pointing to relatively resilient employment, limited forced selling and substantial repayment buffers among many homeowners.
In other words, sellers are not, by and large, being forced to capitulate.
They are simply finding that there are fewer buyers able or willing to pay yesterday’s prices.
That is also increasingly evidenced in the listings data.
Mr Lawless said the number of homes being advertised for sale had risen sharply even though fewer new listings were coming onto the market.
That sounds contradictory until you look at how long properties are sitting around.
Across the combined capitals, new listings are 9.2 per cent below a year ago, yet total inventory is 23.1 per cent higher. The median selling time has blown out from 23 days to 39 days.
“Despite fewer new listings entering the market, inventory levels have risen sharply because the rate of sale has fallen even faster,” Mr Lawless said.
Therein lies the problem.
More choice for buyers would normally be regarded as a positive. At the moment, plenty of those buyers simply don’t have the borrowing capacity, confidence or appetite to act.
Mr Lawless noted that housing turnover over the past three months is now 19.1 per cent lower than a year ago, with Brisbane, Sydney and Perth all recording annual falls of more than 20 per cent.
And that is beginning to spill beyond real estate.
Lower transaction volumes mean less stamp duty for state governments and fewer flow-on benefits for parts of the retail economy, Mr Lawless said.
For now, the market is still adjusting rather than collapsing. But with interest rates higher, inflation still elevated and buyers increasingly constrained, September’s numbers suggest the correction has further to run.
