The Australian housing market moved into a broader downturn through winter 2026 while higher interest rates continued to weigh on borrowing capacity and buyer demand.
National values
Cotality reported that its national Home Value Index fell 0.9% in August 2026, the fifth consecutive monthly decline, leaving national values 3.6% below the March peak. Its September chart pack reported national dwelling values down 3.1% over the three months to August, while annual growth was still positive at 2.7%.
Sydney and Melbourne's upper end has been weaker
Cotality reported upper-quartile house values more than 10% below peak in both Sydney and Melbourne. Lower-priced homes and units had generally been more resilient, illustrating why a national or city median can conceal large differences by price segment and property type.
Interest rates remain restrictive
The Reserve Bank cash rate target is 4.35%, effective 12 August 2026. The RBA said inflation remained too high and that the rate had been increased three times earlier in 2026.
Selling conditions have softened
Cotality's September chart pack reported a national median time on market of 39 days, up from 28 days a year earlier. Total listings were more than 139,100, 18.1% higher than a year earlier, and the four-week average capital-city auction clearance rate was 49.5% at the end of August.
Housing supply
ABS data showed 17,687 dwellings approved in July 2026 on a seasonally adjusted basis, down 3.6% from June but 9.0% higher than a year earlier. Private-sector house approvals fell 4.2% in the month.
What buyers should take from this
A softer national market can improve negotiating conditions, but it also increases the importance of selecting the right submarket and property. Recent price falls do not by themselves make a property cheap; compare the asking price with current comparable sales, rental evidence and likely competing supply.