Cotality Home Value Index August 2026: Home Values Fall 0.9% as 93% of Capital-City Suburbs Decline

This analysis interprets the Cotality Home Value Index August 2026 release independently of Cotality. Monthly prints are provisional and are revised as settlements land. Growth figures are Cotality's unless otherwise attributed; market pricing and bank forecasts are facts only as at the dates stated.

Quick Data Snapshot — August 2026

• Houses −1.1% vs units −0.5% nationally in August; over the quarter houses −3.3%, units −2.2%. Gross rental yield 3.79% nationally (Cotality's summary table rounds to 3.8%).
• Quarterly sales estimate −15.5% y/y; final auction clearance 49.5% for the week ending 30 August (1,462 auctions held, −33% y/y).

Source: Cotality Home Value Index, August 2026, index results as at 31 August 2026 (released 1 September 2026). “From record peak” is Cotality's measure from each market's all-time high; Cotality's August chart pack separately identifies Melbourne's cyclical peak as November 2025 (about $840,000). Yields are Cotality's rounded table figures; the release quotes the national yield as 3.79%.

Source: Cotality Home Value Index, August 2026. Cotality describes regional South Australia as the only broad rest-of-state market to avoid a decline over the three months to August; it is also the only rest-of-state market at its peak on Cotality's from-peak table.

The Headline: Cotality Home Value Index August 2026 Records a Fifth Fall, and a Downturn That Has Gone General

Cotality finding. Research director Tim Lawless describes the change: what started “as a more concentrated easing across higher-value segments has now become a much more generalised softening, with the vast majority of capital city suburbs recording some level of decline.” Sydney, Melbourne, Canberra and Brisbane fell 1% or more in August; Adelaide and Perth were close behind; Hobart slipped 0.2%; only Darwin rose. Over the quarter every capital except Darwin is down and the combined capitals have fallen 3.7%.

The Revisions: Why First Prints Are Provisional

Source: Cotality Home Value Index, July 2026 (released 3 August) and August 2026 (released 1 September). Our comparison of the two releases.

Cotality's hedonic index is estimated daily and re-estimated as settlements are recorded; when turnover is thin (NAB estimates the seasonally adjusted turnover rate at 4.1% of stock in July, down from 5.2% a year ago) the first estimate rests on fewer observations. NAB's August Housing Monitor makes the same point independently: “Revisions continue to show starker price declines than initially reported, with Perth data especially susceptible to recent downward revisions.” The Perth revision also settles July's disagreement between the two major indices (our July 2026 HVI analysis carries the first prints), which had PropTrack showing Perth falling while Cotality's first print had it rising.

Sydney and Melbourne: Sydney Is Falling Faster Than at the Same Stage of 2022–23

Cotality finding. Sydney's median dwelling value is $1,222,718, down from roughly $1.32 million at the February peak; the annual figure has moved to −4.6%. Lawless attributes the pace to “a sharp drop in demand and higher than average advertised stock levels”: estimated Sydney sales are down more than 20% on a year ago, total listings over the four weeks to 30 August were 12.7% higher than last year even though new listings were 16.2% lower, and the final auction clearance rate for the week ending 30 August was 51.5%. Houses fell 1.8% in August and 5.4% over the quarter, units 0.4% and 2.9%; Sydney's house median of $1,494,878 sits just under the $1.5 million price cap of the Australian Government's 5% Deposit Scheme but well above the $1 million ceiling for NSW first-home-buyer stamp-duty concessions.

Two qualifications. First, August's −1.4% is a slower monthly pace than July's revised figure of about −1.7%, so the monthly rate eased even as the cumulative fall outpaced 2022–23; first prints tend to be revised down, so that deceleration is provisional. Second, Melbourne is not far behind: down 1.1% in August and 6.3% year to date, 6.8% below its March 2022 record and about 6% below its November 2025 cyclical peak, and it is the only capital with a negative five-year return (−3.9%) on Cotality's table. Our Melbourne buy-signals framework tracks the conditions for a turn.

The Boom Capitals Turn: Brisbane, Adelaide and Perth

Cotality finding. Brisbane is 2.7% below its May peak, Perth 3.2% below its April peak and Adelaide 1.6% below its May peak; five-year gains are 64.1%, 79.7% and 64.0%. The supply response is the opposite of Sydney's: on Cotality's 28-day count to 30 August, new listings are up 21.3% year on year in Perth, 20.1% in Adelaide and 6.1% in Brisbane, with total listings up 50.5%, 40.5% and 51.4%. SQM Research's monthly count agrees on direction for Brisbane (total +26.5%) and Adelaide (+24.4%) but has Perth's total stock up only 6.0%, so the Perth supply picture is contested between providers. SQM's distressed listings are up 25% year on year in Queensland, 40% in Western Australia and 51% in South Australia, from low bases. Brisbane's final clearance rate for the week ending 30 August was 27.4%, the weakest of any capital. Our companion blog on the two springs of 2026 covers the listings dynamics.

The strongest twelve-month growth is in outer Perth and a mix of inner and outer Brisbane and Adelaide SA3 regions: Serpentine-Jarrahdale (+21.7%) and Mandurah (+20.0%) in Perth, Sherwood-Indooroopilly (+17.3%) and Beenleigh (+14.9%) in Brisbane, Campbelltown (+12.7%) and Onkaparinga (+12.2%) in Adelaide.

Houses vs Units and the Narrowing Tier Gap

Source: Cotality Home Value Index, August 2026, houses and units tables.

Cotality finding. The house-unit pattern holds in the big two and Canberra (−1.2% vs −0.6%); the boom capitals are the exception, with Brisbane at −1.0% for both and Perth units falling faster than houses (−4.1% for the quarter). On price tier, the July release had upper-quartile values down 3.2% over three months while lower-quartile values rose 0.3%; August's commentary describes the direction: “Premium markets are still generally recording weaker conditions, but lower-priced housing is becoming less insulated as affordability pressures and softer demand weigh more evenly across the market.” Our units-versus-houses analysis set out why units have been more resilient this cycle; August supports that in Sydney and Melbourne and complicates it in Perth.

Regional Australia: Softer, With One Exception

The regions turned in July for the first time since January 2023 and August confirmed it. Regional South Australia is the outlier for the same reasons Adelaide held out longest: a tight rental market, an affordable median ($570,005) and a late cycle; it is up 11.4% over the year and 76% over five years.

“Regional” is not one market. Cotality's top regional growth regions are resource-linked (Goldfields in WA, +28.3%; West Pilbara, +19.7%) and inland service centres (Armidale +18.6%, Dubbo +16.3%, Wagga Wagga +16.0%), all twelve-month figures in markets whose state indices have turned. For investors the useful split is resource-linked markets (high yields, employment-cycle risk), commuter belts (which track the capital with a lag), lifestyle coastal markets (the most sentiment-sensitive, and the first to soften in 2022–23) and regional service centres (the most stable rental demand). Regional yields (4.3%) sit about 70 basis points above the capitals with rents up 5.9% over the year, so the regional case remains an income case; our regional property investment guide sets out the screening criteria.

A Demand-Led Downturn: Sales, Listings and the Auction Floor

Source: as listed. Cotality listings are 28-day rolling counts across the eight capitals; SQM counts all listings advertised in the calendar month and is not level-comparable. Days on market and discounting are analysed in our Cotality Housing Chart Pack August 2026 analysis.

Lawless's summary of the mechanism: “Higher advertised stock levels are simply a factor of a slower rate of absorption. Longer selling times, larger vendor discounting and persistently low auction clearance rates all point to a buyer's market, yet buyers are lacking the confidence to transact at the moment.” Cotality expects the usual spring lift in new listings to be weaker than normal, and expects auction volumes of about 1,600 in the week ending 13 September and about 1,700 in the week ending 20 September.

The forced-selling question deserves data rather than assertion. SQM Research's August release counts 4,510 distressed listings nationally, up 4.2% in the month and 10% on a year ago, concentrated in Queensland (+25% year on year), Western Australia (+40%), South Australia (+51%) and the ACT (+60%) while New South Wales and Victoria remain below last year's levels. SQM's own reading is that the rise “does not in itself indicate widespread mortgage distress” but “warrants close monitoring.” Cotality, for its part, points to a still relatively low unemployment rate as the factor limiting widespread arrears and distressed selling, while noting that labour-market conditions are gradually loosening.

Rents, Vacancy and Yields: The Series Moving in Investors' Favour

Source: Cotality Home Value Index, August 2026 (yields); Cotality Property Market Indicator Summary rental snapshot, data to July 2026 (rents); SQM Research National Residential Vacancy Rates, July 2026. The HVI release quotes national rents +5.7% over the year to August.

The combined-capitals yield of 3.6% compares with its low of 3.34% in December 2025, and the national series has climbed to 3.79% from a 3.56% low; rents are up 5.7% over the year, about $38 a week on the national median, and 39% over five years.

Vacancy needs a labelling note. Cotality's own measure rose to 1.9% in August, its highest since January 2025, with Sydney (2.2%) the loosest mainland capital and Adelaide (1.3%) the tightest. SQM's series, used on our Australian vacancy rate tracker, had the national rate at 1.3% in July with five capitals below 1% (see our SQM July 2026 vacancy analysis). The methods differ, so the levels are not comparable, but both show gradual loosening in Sydney, Melbourne and Canberra against very tight conditions in Adelaide, Perth and Brisbane. SQM's August print is due around 14 September.

An illustrative cash-flow example, not a market average. A $900,000 unit at the national unit yield of 4.6% returns about $41,400 a year. With an 80% loan of $720,000 at an assumed 6.5% interest-only rate, interest is $46,800; add an assumed $9,000 for strata or maintenance, insurance, management and rates, and the pre-tax shortfall is roughly $14,400 a year, about $277 a week. At the national house yield of 3.5% the shortfall is near $24,300, about $467 a week. Every figure is an assumption; the cash flow calculator lets you substitute your own. Lawless makes the same point: “yields would need to rise substantially before rental income offsets holding costs, particularly while interest rates remain elevated.”

Cross-Check: What PropTrack Says

Source: Cotality Home Value Index, August 2026; PropTrack Home Price Index, August 2026 (both released 1 September 2026).

Cotality runs a daily hedonic index on a near-universal sales and valuations database; PropTrack runs a monthly hedonically adjusted automated-valuation model on the realestate.com.au listings ecosystem. They usually agree on direction and differ on magnitude; in August the gap was wider than in most months this year, with Adelaide the one market where they nearly coincide. PropTrack has regional prices flat for the month and up 6.6% over the year, against a combined-capitals annual figure of just 0.2%. Our PropTrack Home Price Index tracker carries the full series, and the July 2026 PropTrack analysis covers the Perth disagreement.

The Macro Backdrop: A Hot Core Print and a Live September Meeting

Cotality's outlook: “With core inflation coming in higher than expected, a growing number of economists now expect the RBA could lift the cash rate again in September or November,” and demand “is likely to remain subdued through spring.”

The data behind that view, with dates:

• ABS Consumer Price Index, Australia (monthly), July 2026 (released 26 August): headline 3.5%; monthly trimmed mean +0.5%, the largest rise in a year; annual trimmed mean 3.6% for a third month. The RBA's target is 2 to 3% for CPI inflation, and the Board places most weight on underlying measures when judging persistence. Our ABS CPI July 2026 analysis covers the mechanics; the August CPI is scheduled for 30 September, the morning after the Board's decision.
• ABS National Accounts, June quarter 2026 (released 2 September): GDP +0.4% for the quarter, +2.1% over the year, with households continuing “to behave cautiously.” Cotality notes real wages have fallen for four consecutive quarters.
• RBA: cash rate 4.35% after hikes in February, March and May; held on 11 August while noting inflation remained too high and upside risks persisted; next decision 29 September.
• Market pricing (ASX 30 Day Interbank Cash Rate Futures, as at 3 September): roughly 55% implied probability of a 25-basis-point hike on 29 September, with a hold the main alternative.
• Bank calls (as published at 4 September): NAB, September hike with the risk of another in November; CBA and ANZ, November hike to 4.60%; Westpac, hold through 2026. None of the four publishes a cut in 2026.

Transmission runs through borrowing capacity. Lenders assess new loans at the contract rate plus a 3-percentage-point serviceability buffer under APRA's prudential guidance, so a 25-basis-point rise lifts assessment rates by the same amount; on our illustrative scenario modelling (dual-income household, $180,000 combined gross income, no other debt, standard living-expense assumptions, 30-year principal-and-interest loan) that trims maximum borrowing capacity by roughly 2 to 3%. The ABS already shows the number of new investor loan commitments down 8.6% in the June quarter, with value down 10.2%.

What the Forecasters Expect

Source: CBA Economics via AAP and Yahoo Finance Australia, 2 September 2026; NAB Group Economics, Housing Monitor, August 2026; ANZ Research; Domain; Westpac Economics. As published at 4 September 2026. Our NAB Housing Monitor August 2026 analysis covers the NAB path in detail.

The bases differ: CBA and ANZ describe the full peak-to-trough cycle, NAB's headline is a calendar-year change, Domain's is a financial-year range and Westpac's is calendar 2026, so a −5% and a −10% can describe the same path. The direction of revision has been one way: CBA moved from “flat for 2026” in early June to −9% peak to trough on 2 September, saying the downturn was “faster and deeper than we expected in the weeks following the budget.” And on the August data the more bearish calls are tracking: Sydney is 7.1% below peak against CBA's −13% and NAB's −10% paths. Forecasts are inputs, not instructions; the scenario table below is the check on them.

The Supply Pipeline: Approvals Fall as Completions Lag

The ABS reported total dwelling approvals down 3.6% in July to 17,687 (seasonally adjusted), with private-sector houses falling across every state and other dwellings down 0.4% to 7,119. NAB adds the pipeline detail: apartment and townhouse commencements still exceed completions, detached-house pipelines are back near pre-pandemic levels in Victoria and NSW but elevated elsewhere, and June-quarter producer prices showed a 2.1% quarterly jump in construction input costs. NAB contrasts this with 2018–19, when an apartment boom had been feeding through into cooler rents: “That is not the case now. Vacancy rates remain low and advertised rents growth remains elevated.”

Bull, Base and Bear: What Would Mark the Floor, and What Would Invalidate This Analysis

Source: Our scenario framework, not a statistical model. Weightings are qualitative.

Signals of a floor, in the order they would appear: final clearance above 50% for four consecutive weeks as volumes rise toward 1,700 (current: 49.5%; finals cleared 50% only once since late May, 51.4% for the week ending 9 August); monthly falls decelerating toward −0.5% with first prints no longer revised down (current: −0.9%, July revised to −1.2%); new listings recovering while total listings stop rising (current: new −6%, total +24%); vacancy at or below year-ago levels with rents still growing (current: SQM 1.3%, easing in the big two and Canberra); and a credit catalyst, a cut credibly priced within two quarters or a serviceability adjustment (current: markets price a hike, and none of the four majors publishes a 2026 cut as at 4 September).

What the August HVI Does Not Tell Investors

The HVI is a hedonic index of the stock: it says the median dwelling in a market changed by X%, not what a specific house is worth, and Cotality's own data shows medians revising by half a percentage point a month later. A citywide fall says nothing about suburb-level dispersion: Cotality's SA3 tables have outer Perth up 20% over the year while Sydney's best SA3 managed 4.3%. The index does not measure cash flow, which is why the yield section needs an illustrative example to mean anything for a leveraged buyer. And a falling price is a description, not a valuation: a property is only undervalued relative to its rental demand, land component, supply pipeline, liquidity and local employment base, none of which the index reports.

What It Means for Investors, by Profile

Yield-led investors have the cleanest case: a 3.79% national gross yield (4.6% for units, 4.3% regional) bought into rents still rising 5.7% a year is the highest-yield entry since 2019. Rental floors are firmest in the tight-vacancy capitals (Adelaide, Perth, Brisbane on SQM's series); rent-growth assumptions in Sydney, Melbourne and Canberra should be haircut. The cash-flow example above is the test every leveraged purchase has to pass.

Growth-first investors are working against CBA, NAB and ANZ, all of which forecast further capital-city falls into 2027; Melbourne's negative five-year return (−3.9%) is the reminder that “cheap” is not a timing signal. The disciplined position is prepared waiting: finance validated at current assessment rates, a shortlist priced off recent comparables, and the floor signals above as the trigger.

Buyers in Brisbane, Adelaide and Perth face annual growth of 8.6 to 15.6% in markets that have now posted two consecutive monthly falls of close to 1%; the negotiating room is in the volume of competing listings. Buyers in Sydney and Melbourne face thin fresh supply and a large carried-over inventory; the negotiating room is in the age of the stock, concentrated in upper-quartile houses.

Established-dwelling versus new-build investors face different tax settings. Rental losses on established dwellings acquired after 7:30pm AEST on 12 May 2026 can no longer be deducted against wages or other non-property income from 1 July 2027; they are quarantined to residential property income and capital gains and carried forward. Earlier acquisitions are grandfathered while held, and eligible new dwellings remain outside the quarantining rules; the separate CGT change from 1 July 2027 (an inflation-indexed cost base with a 30% minimum-tax test) applies to gains accruing after that date. Our negative gearing transition rules guide sets out the enacted mechanics.

SMSF trustees cannot establish new limited recourse borrowing arrangements over residential property (prohibited from 10 August 2026, with pre-existing arrangements and qualifying pre-commencement acquisitions continuing under transitional rules), which points fund purchases toward unleveraged, yield-led stock. The SMSF LRBA ban checklist covers the transition.

The Bottom Line: Correction, Crash or Buying Opportunity?

On the August data this is a correction, not a crash, and not yet a broad buying opportunity. Our criteria: a crash requires forced selling at scale, credit stress and double-digit national falls; a correction is demand-led, orderly and shallower than 10% nationally; a buying opportunity requires the floor signals above to fire, not just prices to fall. August meets the correction test on every count: a fifth straight monthly decline leaving the index 3.6% below its March peak, 93% of capital-city suburbs falling through winter, Sydney 7.1% below its February peak, and July's first prints revised sharply lower. Cotality attributes the downturn primarily to weaker demand, and SQM's distressed listings, at about 1.7% of stock, do not yet show forced selling at scale.

It matters because the cause shapes the path. A demand-led downturn with thin fresh supply produces a grind rather than a step down, and it produces the one series still moving in investors' favour: a national gross yield of 3.79%, the highest since September 2019, into a rental market where new supply is falling. The macro backdrop leans against a near-term floor, with a fourth rate hike priced as more likely than not for 29 September and CBA now forecasting a 9% national peak-to-trough fall. The selective opportunity is for unleveraged and yield-led buyers pricing off the last three months of sales; the broad opportunity waits on the floor signals.

What to monitor is dated: Cotality's weekly final clearance rate through September as volumes lift toward 1,700 by 20 September; SQM's August vacancy print around 14 September; the RBA decision on 29 September and the ABS August CPI on 30 September; and the September Home Value Index on 1 October, which we update on the Cotality Home Value Index tracker the day it lands and which carries the revision that tells us how much worse August really was.