Home Prices Fall Again: Should You Buy, Sell or Wait?
Cotality's Home Value Index fell 1.1% in September—the sixth straight monthly decline—with experts forecasting a 10–15% fall from Australia's March peak.
Australian home values fell for a sixth consecutive month in September, taking cumulative declines to 5.2 per cent below March's peak, according to Cotality's Home Value Index. The monthly fall of 1.1 per cent was broad-based: 97 per cent of suburbs across the capital cities recorded value declines over the past three months.
ABC News reports that Brisbane saw the sharpest monthly drop among the capitals, down 1.5 per cent, while Sydney fell 1.4 per cent and Melbourne dropped 0.7 per cent. Darwin recorded a rise of 0.4 per cent, the only capital city housing market to avoid a fall in September.
Cotality's research director Tim Lawless said the data showed the "broad-based scope of the negative housing cycle" and predicted values were likely to continue falling into 2027. "I think a 10 per cent to 15 per cent drop is probably a fairly reasonable estimate at the moment," he said. "It really depends on how far interest rates rise and when we actually start to see the RBA moving into a more dovish period where rate cuts might be on the agenda."
AMP chief economist Shane Oliver was equally direct: "This is already shaping up as the biggest downturn in property prices that we've seen in the last 40 years." In a worst-case scenario, if the Middle East conflict drags on and oil prices surge significantly, he said falls could reach 20 per cent — a level he warned could "knock about 2 per cent off consumer spending" and potentially tip Australia into recession. Oliver noted the RBA's four rate rises in 2026 have reduced what an average wage earner on $109,000 can afford to pay for a home by about $45,000 compared to January.
Why This Cycle Is More Severe Than Previous Downturns
Australia has experienced property price corrections before, but this one is tracking differently. Oliver noted the worst-case scenarios in recent history involved an 8 per cent peak-to-trough fall. The current cycle has already surpassed 5 per cent nationally and is broadening.
Four rate rises in 2026 have compressed borrowing capacity significantly. The average wage earner can now afford to buy a property worth around $500,000, while median property prices across Australia sit around $900,000 — a gap Oliver says "basically reflects the poor affordability problem that Australia faces."
Transaction volumes have also slowed sharply. Cotality data shows the estimated number of national home sales over the past three months is tracking 19.1 per cent lower than a year ago and 13.3 per cent below the previous five-year average. Capital city homes are now taking a median of 39 days to sell, compared with 23 days a year ago. That accumulation of unsold stock is putting further downward pressure on prices.
Queensland developer Soheil Abedian — behind multiple Gold Coast developments including Q1 — warned that rising construction costs combined with falling sale prices could trigger further insolvencies in the construction sector. "If there is a 10 to 15 per cent reduction in the value of homes, the number of the bankruptcies that we have witnessed in the last twelve months increases rapidly and will damage the industry more," he said.
The national rental vacancy rate reached 2 per cent in September, up from a record low of 1.5 per cent in February 2026 — the highest vacancy rate since January 2025, though still well below the pre-COVID decade average of 3.3 per cent.
What It Means for Buyers, Sellers, and Refinancers
**For prospective buyers:** Falling prices look attractive, but buying into a declining market requires careful analysis. If values continue falling into 2027 as Lawless predicts, purchasing now may mean short-term negative equity. Use a borrowing power calculator to understand exactly what you can borrow at today's rates, and make sure your buffer is sufficient. First home buyers should also compare first home buyer loan options to understand the full range of products and government support available.
**For existing owners on variable rates:** Your repayments have risen four times this year. If you have not reviewed your rate recently, now is a good time. Some lenders are still cutting rates for new customers, and the gap between what you are paying and what is available elsewhere may be significant.
**For property investors:** The rising vacancy rate and falling values are creating a more complex equation. Compare investor home loan rates to ensure your rate is still competitive and your cash flow stacks up. Refinancing an investment property can materially improve your yield without selling.
**For refinancers broadly:** Even in a falling market, switching to a more competitive rate remains one of the most effective financial moves available. Use our refinance savings calculator to quantify your potential monthly saving before speaking to a broker.
The key takeaway from Cotality's September data is that this downturn is real, broad-based, and expected to continue. Acting with clear-eyed analysis rather than fear or euphoria is the most effective approach regardless of whether you are buying, holding, or refinancing.
*For full September data, see ABC News' detailed coverage.*