Cotality Home Value Index September 2026: Values Fall 1.1% for a Sixth Month as 97% of Capital-City Suburbs Decline Over Three Months

National dwelling values fell 1.1% in September on the Cotality Home Value Index, the sixth monthly fall in a row, and 97% of capital-city suburbs lost value over the three months to the end of September. National values are 5.2% below their March 2026 peak and unchanged (0.0%) over the 12 months to September. Brisbane (−1.5%) edged past Sydney (−1.4%) for the sharpest monthly fall.

In one sentence: the correction has spread from the premium end of Sydney and Melbourne into Brisbane, Adelaide and Perth, and so far the data point to weak demand, with little sign of forced selling.

Independent analysis of the Cotality release. Monthly prints are provisional and revised as settlements are recorded.

Source: Cotality Home Value Index, September 2026 (index results as at 30 September, released 1 October 2026); monthly = September 2026, annual = 12 months to September 2026; RBA, 29 September 2026; lender announcements of 30 September 2026.

How Much Did Home Values Fall in September 2026?

Source: Cotality Home Value Index, September 2026, dwellings, index results as at 30 September 2026 (released 1 October 2026), September 2026 vintage.

Why the columns disagree. Each measure starts at a different point. The national peak was March 2026, but the capitals did not turn together: Sydney peaked in February, Perth in April, Brisbane and Adelaide in May and Darwin in July, while Melbourne, Hobart and Canberra are still below records set in 2022. Brisbane shows the gap most clearly: +5.9% over the year (measured from September 2025, before its run to the May peak), +0.1% year to date and −5.4% from its May peak. Nationally the same three measures read 0.0%, −3.0% and −5.2%.

Cotality finding. Cotality attributes the downturn to “a combination of affordability constraints, higher interest rates, elevated living costs, and weaker consumer sentiment”. Its median values are model estimates re-derived each release, so a change in the reported median between editions is not the hedonic percentage change.

What changed since the August edition: revisions on the latest data

Cotality re-estimates each month as settlements are recorded. This release revised August toward a weaker result in six of the eight capitals; Melbourne and Canberra were essentially unchanged.

Source: Cotality Home Value Index, September 2026, “Prior month level of revision” (p. 7), comparing the August 2026 and September 2026 vintages; first-published August figures from Cotality's release of 1 September 2026.

How much of the move is revision. Cotality doesn't publish index levels, so the split has to come from its rounded percentages. On the September vintage, national values are 94.8% of the March peak (−5.2%). Taking out September's 1.1% fall puts the end-of-August level at 0.948 ÷ 0.989 ≈ 0.9585, about 4.1% below peak on the latest data, against the 3.6% first published on 1 September. So roughly 0.5 of the 1.6 points between −3.6% and −5.2% comes from revisions to earlier months and about 1.1 points from September. Each input is rounded to 0.1 point, so the split could be a tenth either way, and the calculation assumes the March peak level was not itself revised.

How Broad Is the Downturn? 97% of Suburbs and Most of the Regions

Cotality finding. “97% of capital city suburbs were down in value over the three months to end of September, highlighting the broad-based scope of this negative housing cycle,” said research director Tim Lawless. Over the quarter, every capital except Darwin (+0.5%) fell, from Hobart (−1.2%) to Sydney (−4.9%).

The regions are mixed. Combined regional values fell 0.7% in September and sit 2.2% below their May peak, but the state results range from still rising to clearly decelerating:

Source: Cotality Home Value Index, September 2026, dwellings (released 1 October 2026). Month = September 2026; quarter = three months to September; annual = 12 months to September; from peak = from each region's record high. Regional NT is not published for dwellings.

Regional SA and Tasmania are within 0.1% of peaks set in August, and regional WA edged up in the month. Regional Queensland and NSW are where the slowdown is clearest, both 2.8% below their autumn peaks. Even the strongest SA3 markets are decelerating:

Source: Cotality Home Value Index, August and September 2026, top-ten SA3 tables by 12-month change in dwelling values. Sydney's best SA3 in the August release recorded +4.3%.

Only four of Cotality's Sydney top-ten SA3s recorded any annual gain, and two each in Melbourne and Canberra. Every SA3 in the Brisbane, Adelaide, Perth and Darwin top tens is still up more than 6%, but much of that growth predates the autumn peaks.

Why Are Brisbane, Perth and Adelaide Now Falling Faster Than Melbourne?

Cotality finding. “The result highlights how sharply conditions have shifted in what had previously been one of the strongest performing housing markets,” Cotality says of Brisbane, which is 5.4% below its May peak after four monthly falls. Perth is 6.0% below its April peak and Adelaide 2.9% below its May peak. Brisbane's annual growth dropped from 10.8% in the August release to 5.9%, and Perth's from 15.6% to 10.1%.

The supply side, two measures. The September HVI has combined-capital new listings 9.2% below a year earlier and total inventory 23.1% higher, without stating the measurement window. City detail comes from Cotality's September chart pack for the four weeks to 6 September: total listings up 53.3% on a year earlier in Brisbane and Perth and 41.0% in Adelaide, against +11.3% in Sydney and +14.2% in Melbourne. New listings in that window were also above a year earlier in Brisbane (+5.4%), Adelaide (+14.3%) and Perth (+19.8%), but well below it in Sydney (−18.8%) and Melbourne (−13.7%). Median days on market over the three months to August reached 35 in Brisbane (19 a year earlier) and 22 in Perth (12).

No unit cushion here. Brisbane houses fell 1.5% and units 1.4%; Perth units (−1.4% for the month, −5.1% for the quarter) fell faster than houses (−1.2%, −4.6%).

Sydney and Melbourne: Is This Deeper Than the 2022–23 Downturn?

Cotality finding. “Sydney continues to lead the housing correction.” Year to date (January to September) Sydney is down 8.2% and Melbourne 7.0%. Sydney houses fell 1.6% in September and 5.6% over the quarter, against 1.0% and 3.0% for units; Melbourne houses fell 0.9% and units 0.3%.

Price tier. The September HVI does not publish quartile data, but Cotality's September chart pack (August data) did: “upper quartile houses in the two largest cities already down by over 10%”. Over the three months to August its stratified index had Sydney's top quarter down 5.7% against 2.1% for the bottom quarter, and Melbourne's down 5.3% against 1.3%. In Brisbane and Perth the falls were spread far more evenly across price tiers.

Comparing with 2022–23 means comparing vintages. As first published at the time, the 2022–23 downturn took the national index down 9.1%; on Cotality's current revised series the same episode is about 7.5%. The like-for-like comparison is today's −5.2% against that −7.5%, both on the current series. The 2026 downturn is incomplete, so this compares the distance travelled so far. The earlier downturn ended quickly as migration surged and unemployment fell to 3.4% (ABS); our RBA 4.60% analysis sets out why those offsets look weaker now.

For investors, units in both cities yield more (4.4% Sydney, 5.2% Melbourne) and fell less over the quarter (−3.0% against −5.6% for Sydney houses; −2.2% against −3.9% in Melbourne).

What Do Sales, Listings and Days on Market Say About Demand?

Source: as listed. Clearance figures are Cotality's final series, not Sunday preliminaries.

Lawless's explanation of the inventory build: “Despite fewer new listings entering the market, inventory levels have risen sharply because the rate of sale has fallen even faster.”

What the data can and can't say about cause. Falling sales, rising inventory and fewer new listings together fit demand-led weakness. The FSR evidence below suggests forced selling is limited so far, though some discretionary investor selling may be adding to stock. The data can't establish a single cause.

Cotality's outlook is for conditions to “remain under downward pressure over the coming months”. It lists borrowing capacity, affordability, “deeply pessimistic” confidence and the tax changes as headwinds, with a labour market that “remains reasonably tight” and low new supply as offsets. Its central case is “a gradual drift lower in housing values rather than a material downturn.”

Rents, Vacancy and Yields: Does the Yield Repair Survive the Hike?

Cotality finding. National rents rose 0.3% in September (seasonally adjusted), the smallest monthly rise since May 2025, and 5.5% over the year (5.7% in the August release). The national 3.85% is Cotality's gross yield for all dwellings (rents against values at the same date), not an average of the house and unit yields below. Yields are rising because values are falling and rents are still growing.

Source: Cotality Home Value Index, September 2026 (houses and units tables; annual rent change to September 2026; vacancy commentary). n/p: not published in the release.

Vacancy needs a label. Cotality's measure rose to 2.0% from a record low of 1.5% in February, still well below its pre-COVID decade average of 3.3%. SQM Research's series, this site's house measure, had the national rate at 1.3% in August (see our SQM August 2026 vacancy analysis). The methods differ and the levels are not comparable: both put Sydney among the looser capitals and Adelaide among the tightest, but Hobart is the loosest on Cotality's measure (3.0%) and among the tightest on SQM's (0.6%).

Interest-cover stress test after the 29 September hike

Formula. Interest cover = gross yield ÷ (0.8 × interest rate), which is gross rent divided by a year's interest on an interest-only loan at 80% of value. A result of 1.0× means rent just covers interest. The 29 September hike and lender pass-through are covered in the rate section below.

Source: Cotality gross yields, September 2026; our calculation. 6.5% is the RBA's average rate on new investor interest-only loans funded in July 2026 (RBA Table F6, published 7 September 2026 to one decimal place). 6.75% is an assumed post-hike rate that adds the full 25 basis points; it is not the rate every investor pays. Gross interest cover is not net cash flow or profitability: it excludes strata, insurance, maintenance, management, council rates, land tax, vacancy and tax effects.

On these assumptions the gross yield needed to cover interest rose from 5.2% to 5.4% (0.8 × the rate), and Melbourne and Perth units slipped from just covering interest to just below it. Darwin houses (6.0%) also clear the bar; no other capital-city segment does. As a dollar example, a $700,000 unit at the national unit yield of 4.7% earns about $32,900 a year in rent; interest on a $560,000 interest-only loan at 6.75% is $37,800, and an assumed $8,000 of holding costs leaves a pre-tax shortfall of about $12,900 a year, roughly $248 a week. The hike alone adds $1,400 a year, about $117 a month. Every input is an assumption; the cash flow calculator lets you substitute your own.

Cross-Check: What Does PropTrack's September Index Show?

Source: Cotality Home Value Index, September 2026; PropTrack Home Price Index, September 2026 (realestate.com.au Home Price Report, released 1 October 2026), as syndicated by propertyupdate.com.au, with national figures confirmed by Broker News. *Hobart and Canberra not available in the syndicated source. †Not in Cotality's September release.

Creagh's read: “The spring selling season has so far failed to deliver the usual lift in momentum,” and “Higher interest rates remain the dominant headwind for housing demand.” PropTrack and Cotality use different hedonic models, data and geographic coverage, so the two indexes are not fully comparable; our PropTrack August 2026 analysis explains the methods, and our PropTrack Home Price Index tracker holds the monthly series.

Will the 29 September Rate Hike Force Investors to Sell?

The rate change. The RBA raised the cash rate 25 basis points to 4.60% on 29 September, its fourth increase of 2026 and the highest level since 2011. On 30 September CBA, Westpac, ANZ and NAB (as reported by the ABC) announced 0.25 percentage point increases to variable home-loan rates effective 9 October; Macquarie follows on 15 October. On interest-only debt the rise is about $21 a month per $100,000.

The labour market, dated. Unemployment rose to 4.6% in August from 4.5% (ABS Labour Force, released 24 September); the September figure is due on 15 October.

The inflation backdrop, dated. ABS data released on 30 September showed headline CPI at 4.0% in the year to August, while the trimmed mean held at 3.6%. In a snapshot taken on 30 September after the release, money markets priced about a 20% chance of a November hike (ABC markets blog). Two major banks still expect another rise: Westpac (Luci Ellis, 30 September) now has a “November follow-up” as its base case, and ANZ judged a November hike “more likely than not”. CBA called the decision “finely balanced” but not its base case.

What the RBA's October Financial Stability Review says

Source: RBA, Financial Stability Review, October 2026 (released 1 October 2026; data cut-off 25 September 2026, before the 29 September decision). Shaded stress-test rows are RBA hypothetical scenarios, not forecasts.

The RBA judges that “most borrowers – households and businesses – are well positioned to manage through a period of slowing economic growth and declining housing prices,” while noting that investor activity “can amplify price declines”. A footnote points the other way: grandfathered negative gearing “could motivate some borrowers to hold on to their properties to maintain this ability.”

Bull, Base and Bear: What Could the Next Three Prints Show?

Method: our arithmetic. Each monthly change is applied uniformly to the October, November and December 2026 prints (released early November, early December and early January) and compounded from the September level of 94.8% of peak; for example, base low = 0.948 × 0.993³ ≈ 0.928, or −7.2%. Weightings are qualitative; the base case is our central assessment, conditional on the triggers shown, not a point forecast. These paths are separate from the published forecasts below.

Limitations. Revisions can move the starting point by several tenths of a point, thin volumes make first prints noisier, and rates, jobs and sentiment can shift within a quarter. The paths cover the national index only and are not suburb-level predictions.

Dated signals to watch: weekly final clearance rates (latest 49.1%, week ending 20 September); the ABS labour force release on 15 October; the September-quarter CPI on 28 October; and Cotality's October index in early November, the first print covering a month of post-hike repayments.

The published forecasts. CommBank (1 September) expects a national peak-to-trough fall of about 9%, with Sydney 13% and Melbourne 12%; that sits inside our base-to-bear range for the December print. Lawless told the ABC on 1 October that “a 10 per cent to 15 per cent drop is probably a fairly reasonable estimate at the moment”, which lies beyond it. Both are peak-to-trough calls with no trough date, so they are not directly comparable with our three-month paths. AMP's Shane Oliver called it “already shaping up as the biggest downturn in property prices that we've seen in the last 40 years.” Our companion scorecard, Australian property price forecast 2026–2027, compares the bank and industry calls in full.

What Does the September HVI Mean for Investors?

Tax settings depend on the asset and the date. Under the enacted Treasury Laws Amendment (Tax Reform No. 1) Act 2026:

• Negative gearing. From 1 July 2027, losses on established dwellings acquired after 7:30pm (ACT legal time) on 12 May 2026 are quarantined to residential property income, including capital gains. Holdings acquired before the cut-off are grandfathered while held (s 26-155), and eligible new builds are carved out.
• CGT. From 1 July 2027, most assets held by individuals and trusts move to CPI indexation plus a Division 119 floor (tax of at least 30% of the minimum tax capital gain). A deemed disposal (s 112-155) preserves the 50% discount on gains accrued to 30 June 2027, and eligible new residential dwellings keep a 50% discount on later growth (ss 115-100(a), 115-102).
• Super funds. Complying super funds keep the one-third discount and are excluded from the new method. Since 10 August 2026, new limited recourse borrowing arrangements can only acquire business real property (SIS Act s 67A(2) as amended; business real property as defined in s 66), so new SMSF residential purchases are unleveraged; existing LRBAs are grandfathered, with refinancing permitted (see our SMSF LRBA ban checklist).

How these apply to you depends on your acquisition date, whether the asset is eligible, and when each rule commences; get personal tax advice before acting. Our negative gearing grandfathering guide sets out the mechanics.

Illustrative investor profiles; situations are hypothetical.

We update the Cotality Home Value Index tracker on each release day.

The Bottom Line

The annual change in national home values reached zero in September after a sixth monthly fall, and the downturn now reaches almost every capital-city suburb. Compared with the August 2026 edition, two things changed: Melbourne's fall slowed to 0.7% while Brisbane, Adelaide and Perth each fell more than 1%, and revisions show August was weaker than first reported, so the national pace has not eased.

For investors, the evidence describes a grind lower driven by thin demand, and the RBA's October FSR finds household balance sheets strong enough that we read widespread forced selling as unlikely so far. Gross yields are improving, but most segments still don't cover interest after the hike.

What to monitor: the big four's repricing from 9 October, the September-quarter CPI on 28 October, Cotality's October index in early November, and the RBA's decision on 3 November. A floor would show first in clearance rates and sales volumes, and neither has turned yet.