Halfway Down? What the Forecasts Say Is Left

The combined capitals cleared 48.2% on 1,223 auctions (preliminary; 875 reported: 429 cleared, 446 uncleared) over a long weekend in four jurisdictions. NSW, the ACT and South Australia take Monday 5 October for Labour Day and Queensland takes it for the King's Birthday, so this is a holiday-weekend print. Volume fell 14.4% from 1,428 and the preliminary rate slipped 2.1 points from 50.3%, to the lowest preliminary read since 21 June (47.4%).

Last week's 50.3% has not yet been finalised. Through September, finals have come in about 4 to 5 points below the preliminary read (the 20 September weekend went from 54.0% to 49.1%), so the underlying rate is likely still in the mid-to-high 40s.

Sydney and Melbourne

Melbourne, back from the Grand Final weekend, scheduled 670 auctions (from 286) and cleared 50.6% (494 reported, 250 cleared). Sydney fell to 304 auctions from 790 with Labour Day and cleared 55.7% (230 reported, 128 cleared), the best result of the capitals and up from 53.6%.

Brisbane, Adelaide, Canberra, Perth, Tasmania

Brisbane cleared 25.6% on 78 reported results (20 cleared, 58 uncleared) over Queensland's King's Birthday weekend, its weakest preliminary since the 24.8% of 6 September. Adelaide edged up to 41.5% from 39.3% on 41 results, and Canberra fell to 41.7% from 53.9% on 24 results, from a book of 31 against 82 a week earlier. Perth returned six results at 33.3%. Tasmania cleared both of its two auctions, which is why the combined cleared count (429) is two more than the sum of the six mainland capitals.

The year-ago comparison

The same weekend in 2025 was also the NSW, ACT, SA and Queensland long weekend, which makes the comparison a fair one. Cotality's preliminary read then was 71.9% on 1,961 auctions, so this year is 23.7 points lower on 37.6% less volume. By city: Sydney 55.7% against 72.4%, Melbourne 50.6% against 71.6% (on 1,169 auctions a year ago), Brisbane 25.6% against 69.3%, Adelaide 41.5% against 78.8% and Canberra 41.7% against 70.6%.

September values, city by city

National values fell 1.1% in September, the sixth straight monthly fall, leaving the index 5.2% below its March peak and flat over the year (0.0%). The national median dwelling is $899,236. Every capital except Darwin fell, and 97% of capital-city suburbs lost value over the three months to September. August was revised from -0.9% to -1.2%.

Sydney fell 1.4% ($1,198,596; -4.9% quarter, -7.0% annual) and is 8.6% below its February peak, marginally deeper than at the same stage of the 2022-23 downturn. Houses fell 1.6% and units 1.0%. Melbourne fell 0.7% ($780,550; -3.4% quarter, -6.2% annual), a milder fall than any of the mid-sized capitals, with units down 0.3%; values are 7.5% below the March 2022 record. Brisbane fell 1.5% ($1,048,880; -4.7% quarter, +5.9% annual), the sharpest monthly fall of the capitals, and August was revised from -1.0% to -1.6%.

Perth fell 1.2% ($975,022; -4.7% quarter, +10.1% annual) and is 6.0% below its April peak, with August revised from -0.8% to -1.7%. Adelaide fell 1.3% ($928,560; -2.7% quarter, +6.5% annual) and is only 2.9% below its May peak. Hobart fell 0.5% ($741,496), Canberra 1.1% ($861,744; 6.2% below its 2022 peak) and Darwin rose 0.4% ($633,431; +11.9% annual). Combined regional values fell 0.7% but are still up 5.6% over the year, against -1.8% for the combined capitals.

Activity is falling faster than prices. Estimated sales over the past three months were 19.1% below a year earlier nationally and 13.3% below the five-year average, with Brisbane down 27.2%, Sydney 26.5% and Perth 24.2%. New listings in the capitals are 9.2% lower than a year ago, yet total inventory is 23.1% higher, because homes are taking a median 39 days to sell, against 23 a year ago.

The RBA Board lifted the cash rate 25 basis points to 4.60% on 29 September, a unanimous decision and the fourth rise of 2026, taking the rate to its highest level since 2011. The Board said that "some of the upside risks flagged in August are materialising", citing energy prices well above its August assumptions, and kept a tightening bias, ready to raise "further if needed". It also noted that housing prices have fallen in most capital cities and that new housing loans have declined noticeably.

Pass-through

On 30 September CBA, Westpac, ANZ and NAB announced 0.25 percentage point increases to their variable home-loan rates, effective Friday 9 October; Macquarie follows on 15 October. On interest-only debt that is about $21 a month per $100,000 borrowed, or about $125 a month on a $600,000 loan. The four rises of 2026 together add $625 a month to a $750,000 interest-only investor loan.

Inflation

The ABS August monthly CPI, released the day after the decision, showed headline inflation jumping to 4.0% from 3.5%, driven by electricity (up 13.2% over the year) and automotive fuel (up 13.5%). The trimmed mean held at 3.6% for a fourth month and rose 0.2% in August after July's 0.5%. On our reading, the energy shock is lifting the headline rate while the softer monthly core gives the Board some room before the September-quarter CPI on 28 October.

November

After the CPI, money markets priced about a 20% chance of a further rise on 3 November. The banks are more hawkish: Westpac now has a November follow-up to 4.85% as its base case and ANZ judged one "more likely than not", while CBA called the decision finely balanced but does not forecast it. Unemployment rose to 4.6% in August; the September figure lands on 15 October.

Financial stability

The RBA's October Financial Stability Review, with data to 25 September, finds fewer than 1% of borrowers in negative equity, around 2% of variable-rate owner-occupiers with a cash-flow shortfall, and the median borrower able to cover more than a year of repayments from offset and redraw balances. It notes that investors mostly hold considerable equity but may be "more inclined to sell properties to limit losses" in a falling market. In its hypothetical further 20% price fall, around 5% of mortgages would move into negative equity. Our read is that the risk is buyers staying away and some investors choosing to sell, rather than forced selling at scale.

What it means for investors: reprice every loan at your lender's post-9 October rate, then test it 25 points higher for a 4.85% cash rate. The next decision is Tuesday 3 November, Melbourne Cup Day.

SQM's September vacancy print lands in mid-October, so the vacancy read still rests on August. National vacancy held at 1.3% for a third month on 41,039 vacant dwellings. Canberra (2.1%), Melbourne (1.8%) and Sydney (1.7%) are the loose end; Brisbane (0.9%), Perth (0.6%), Adelaide (0.6%), Hobart (0.6%) and Darwin (0.4%) remain under 1%.

Rents in September

Cotality's rent index rose 0.3% in September, the smallest monthly rise since May 2025, and 5.5% over the year. Annual house rent growth to September: Darwin 11.4%, Hobart 8.7%, Perth 8.0%, Brisbane 6.7%, Adelaide 6.3%, Sydney and Melbourne 4.9%, Canberra 3.8%. Unit rents: Darwin 12.0%, Perth 7.5%, Adelaide 6.1%, Brisbane 5.9%, Hobart 5.0%, Melbourne 4.8%, Sydney 3.7% and Canberra 1.5%.

Cotality's own vacancy measure, which uses a different method from SQM's and is not directly comparable, rose to 2.0% from a record low of 1.5% in February, the highest since January 2025. The rise has come despite a sharp pullback in investment, which fits renters forming larger households to cope with stretched rental affordability.

Yields

The national gross yield reached 3.85%, the highest since August 2019. Capital-city yields range from 3.4% in Sydney to 6.5% in Darwin: Melbourne 4.1%, Brisbane 3.5%, Adelaide 3.6%, Perth 4.0%, Hobart 4.4% and Canberra 4.4%. By segment, Darwin units yield 7.5%, Canberra units 5.5%, Melbourne and Perth units 5.2% and Sydney houses 3.0%. At an assumed post-hike investor rate of 6.75%, a gross yield needs to clear about 5.4% to cover interest on an 80% interest-only loan; Darwin houses and units and Canberra units clear it, and Melbourne and Perth units now sit just below. These are gross yields, before strata, insurance, rates, management and vacancy.

Halfway down? What the forecasts say is left

Six months into the correction, national home values are 5.2% below their March peak. Anyone holding a deposit wants to know how much further prices can fall.

The published forecasts give an answer, once they are put on a common basis. The main cluster of formal peak-to-trough calls runs from 9% to 13%: CBA 9% nationally, Macquarie about 10%, ANZ 10.6% for the capitals and HSBC 13% nationally. The full range runs from Westpac's 7.3% for the five largest capitals to the top of AMP's 10% to 15%. Anything beyond that, such as the RBA's hypothetical further 20% fall, is a stress test rather than a forecast.

How much is already done

On Cotality's national index the fall to date is 40% to 60% of that cluster. CBA's 9% implies about 4.0% more from here and HSBC's 13% about 8.2%. At September's pace of 1.1% a month, CBA's trough would show up in about four months, around the January index. Sydney is further along, at 8.6% below its February peak against a 13% CBA call for the city, which leaves about 4.8%.

The choice of index changes the answer. PropTrack's model has national values only 3.3% below peak, so on its numbers more of any given forecast fall is still ahead. Revisions have also deepened the fall. August was first published at -0.9% and now reads -1.2%, and roughly half a point of the move from 3.6% to 5.2% below peak came from revisions to earlier months rather than from September itself. This year's first prints have understated the fall, so treat each new monthly figure as provisional.

Why the range may be too mild

Most of these forecasts were finalised before the 29 September hike, on cash-rate assumptions that are now out of date, and no bank has formally revised its price call since. Westpac and ANZ have moved their rate calls to a second rise in November, to 4.85%, without changing their price forecasts. On our reading, if November goes ahead, the lower end of the cluster is the more exposed.

The market data show no turn yet. Over the three months to September, 97% of capital-city suburbs lost value, estimated sales were 19.1% below a year earlier and 13.3% below the five-year average, and capital-city homes took a median 39 days to sell, against 23 a year ago. Total listings in the capitals are 23.1% above a year ago even though fewer new listings are coming on, because stock is selling more slowly than it arrives.

Wait, or buy?

Waiting has a price. On the illustrative numbers in our forecast guide, buying now rather than in 12 months costs a negatively geared buyer about 3.55% of the price before tax, or about 2.4% after tax, if prices are flat over the year. Every forecast in the main cluster implies a larger fall than that still to come on Cotality's index, so for a buyer with no deadline, patience is the sensible default this spring.

Two cases cut the other way. A market that isn't falling offers no discount to wait for; Darwin rose 0.4% in September and regional WA 0.1%. A high enough yield also shrinks the holding cost. With variable rates rising 25 points from Friday, gross rent covers the interest on an 80% interest-only loan at 6.75% only where the yield clears about 5.4%, which among the capitals means Darwin houses and units and Canberra units. These are gross figures, before strata, insurance, rates, management and vacancy.

The investor takeaway

Use the forecasts to set a price range, and expect the timing of the trough to move. Watch the two signals that usually turn first, the finalised clearance rate (near 50% this spring) and sales volumes. Until one of them turns, negotiate off the forecast range, run every deal at a 4.85% cash rate, and buy early only where the yield or the local market gives you a reason to.

The week ahead

The data calendar is light this week and busy after it. Friday 9 October the big four's rate rises take effect. Mid-October SQM publishes September vacancy, the first read on whether spring listings and larger households are loosening the rental market. Thursday 15 October the ABS releases September labour force data, and 28 October brings the September-quarter CPI, the main input into the 3 November decision. Next weekend carries no public holiday in any capital, so the clearance rate becomes comparable again.