Housing downturn reaches sixth month as stock builds and sales slow

Australian home values fell for a sixth consecutive month in September, with two major indices pointing to a broad housing downturn even though they differed on its pace.

Cotality’s national Home Value Index dropped 1.1 per cent during the month and was 5.2 per cent below its March 2026 peak. The realestate.com.au Home Price Report, which uses PropTrack data, measured a smaller monthly fall of 0.2 per cent and placed national prices 3.3 per cent below their March peak.

The gap reflects differences in data, models and index construction. Buyers and sellers should not treat either figure as the precise movement of an individual property. The important common signal is that prices have been declining for six months, capital cities are generally weaker than regional markets, and homes are taking longer to sell.

The downturn has spread beyond Sydney and Melbourne

Cotality found every capital except Darwin recorded a monthly decline. Brisbane had the largest fall at 1.5 per cent, narrowly ahead of Sydney at 1.4 per cent, while Melbourne declined 0.7 per cent.

The report said 97 per cent of capital-city suburbs had lost value over the three months to the end of September. Sydney values were 8.6 per cent below their February peak, while Melbourne was 7.2 per cent below its most recent cyclical high.

The realestate.com.au report also showed weakness spreading into markets that had previously been more resilient. On its measure, Adelaide had the largest capital-city fall in September at 0.6 per cent. Sydney and Perth each declined 0.3 per cent, while Brisbane and Melbourne fell 0.2 per cent.

The smaller changes do not alter the direction of travel. The report said Sydney and Melbourne remained the deepest corrections, but downward momentum had strengthened in Adelaide, Brisbane and Perth as higher borrowing costs constrained buyers.

Darwin was again the exception. Cotality recorded a 0.4 per cent rise for the month, while realestate.com.au measured a 0.1 per cent increase.

More homes are competing for fewer sales

The weakening market is not only visible in price indices.

Cotality estimated that national home sales during the past three months were 19.1 per cent lower than a year earlier and 13.3 per cent below the previous five-year average. Brisbane recorded the sharpest annual fall in sales volumes at 27.2 per cent, followed by Sydney at 26.5 per cent and Perth at 24.2 per cent.

At the same time, total advertised inventory across the combined capitals was 23.1 per cent higher than a year ago. New listings were actually down 9.2 per cent, indicating that stock was accumulating because properties were selling more slowly rather than because of a rush of new vendors.

The median capital-city selling time had stretched from 23 days a year ago to 39 days, according to Cotality.

This combination gives active buyers more properties to compare and more time to conduct due diligence. It also increases the risk that vendors who start with an ambitious asking price will spend longer on the market and eventually need to discount.

Houses are under greater pressure than units

Affordability is also changing the relative performance of property types.

The realestate.com.au report found national house prices fell 0.3 per cent in September and were 0.4 per cent lower than a year earlier. Unit prices were unchanged during the month and remained 1.8 per cent higher annually.

Units can still carry significant strata, defect and oversupply risks, so stronger index performance is not a substitute for researching the building. However, the figures indicate that buyers facing reduced borrowing limits are increasingly considering lower-priced homes rather than leaving the market altogether.

Regional areas also remained more resilient. Realestate.com.au recorded no monthly change across regional markets and annual growth of 5.1 per cent, compared with a 1.6 per cent annual decline across the combined capitals. Cotality similarly reported annual regional growth of 5.6 per cent against a 1.8 per cent decline in the capitals.

What it means for you

• Buyers generally have more choice and negotiating time, but borrowing capacity remains the main constraint.
• Sellers should use recent comparable sales and allow for longer campaigns rather than relying on prices achieved near the market peak.
• Apartment buyers may find values holding up better, but should still examine strata records, levies and building defects.
• National indices describe direction, not the value of a particular home or suburb.