Almost every capital-city suburb went backwards in the September quarter — and the latest RBA hike came at the end of it. That is the uncomfortable combination in Cotality's 1 October Home Value Index and the RBA's 29 September decision. If you're an Australian property investor, the question isn't whether values have fallen. It's whether your numbers still work if they keep falling while borrowing costs rise.
Let's separate the dramatic headline from the actual measurements. 97% refers to capital-city suburbs with falling values over the three months to 30 September, not 97% of homes sold in September, and not every suburb in Australia. National dwelling values fell 1.1% in September, the sixth consecutive monthly decline, and stand 5.2% below the March 2026 record high. These are estimates from a home-value index, not a sale-by-sale audit of your street.
Brisbane just overtook Sydney — in the wrong direction
The latest month is a reversal of the familiar story that Brisbane will always outrun the southern capitals. Here are Cotality's dwelling-value index changes for September 2026, not predictions and not asking-price cuts:
| Market | September | September quarter | Past year |
|---|---|---|---|
| Brisbane | −1.5% | −4.7% | +5.9% |
| Sydney | −1.4% | −4.9% | −7.0% |
| Adelaide | −1.3% | −2.7% | +6.5% |
| Perth | −1.2% | −4.7% | +10.1% |
| Canberra | −1.1% | −3.2% | −1.6% |
| Melbourne | −0.7% | −3.4% | −6.2% |
| Darwin | +0.4% | +0.5% | +11.9% |
| National | −1.1% | −3.7% | 0.0% |
Source: Cotality, Home Value Index October 2026 report, data to 30 September. Darwin was the only capital to rise that month. The annual column matters: Brisbane and Perth are still up over 12 months, even after sharp quarterly falls. Saying every market has "crashed" erases that difference.
Sydney, meanwhile, is 8.6% below its February peak, according to Cotality. That is a peak-to-current index change, not the same thing as Sydney's −7.0% annual reading. Mixing those two windows is an easy way to make a chart look even scarier than it is.
The rate rise lands on a market that was already sliding
On 29 September, the RBA raised the cash rate target by 0.25 percentage points to 4.60%, citing stubborn inflation and higher energy costs. Its own statement acknowledged that housing prices had fallen in most capitals and new housing loans had declined noticeably. Cotality's immediate assessment of the hike says this year's rate rises have cut borrowing capacity by almost $90,000 in its modelling.
Timing matters: you cannot attribute the whole September price fall to a rate decision made on 29 September. Prices were declining for five months before this latest move. The hike is a new headwind for future demand, not an explanation for every past decline. Lenders' rate changes and borrowers' repayment dates also lag the RBA announcement; Canstar notes the repayment adjustment can take months for some customers.
So what is already driving the slide? Cotality names stretched affordability, earlier rate rises, elevated living costs and weaker buyer sentiment. There is also a quieter signal in its October report: sales over the three months were 19.1% lower than a year earlier, while total advertised stock across the combined capitals was 23.1% higher despite fewer new listings. Homes took a median 39 days to sell, up from 23 days a year ago. Listings are accumulating because buyers are moving more slowly, not simply because a wave of new sellers arrived.
Is this a crash — or just the start?
Nobody can tell you the bottom from one monthly release. The ABC reported Cotality research director Tim Lawless saying a 10–15% national peak-to-trough fall is a reasonable possibility, dependent on how far rates rise and when policy turns. That is not a recorded fall and not a guaranteed forecast. The recorded national decline so far is 5.2% from the March peak. Nor does a 1.1% monthly fall imply twelve identical months ahead: price changes do not run on a metronome.
For perspective, on a purely illustrative $900,000 property, a 5.2% decline works out to $46,800 in paper value. That is not your property's valuation; the index measures a broad market. If your loan balance had been $720,000, a hypothetical value fall from $900,000 to $853,200 would lift loan-to-value ratio from 80% to about 84% with the debt unchanged. That affects refinance headroom even if your rent is paid on time and you have no intention of selling.
There are counterweights, too. Cotality's report says regional dwelling values were up 5.6% over the year versus down 1.8% for combined capitals; rents and underlying housing supply can cushion some investors. NAB's post-decision analysis still forecasts a hold from here, while acknowledging further tightening is a risk. A further rate hike is possible, not settled.
What to check before reacting to a headline
- Get a current range for each property's value. Compare similar local sales rather than multiplying the national index by your purchase price. Record the low end for a refinance stress test.
- Recalculate LVR by property, not just across the portfolio. A strong performer can hide one loan whose equity buffer has shrunk. Note any fixed-rate expiries and interest-only rollover dates alongside it.
- Stress-test cash flow with higher repayments and a vacancy. Check actual lender repricing dates; a cash-rate rise is not automatically an immediate 0.25-point increase on every loan. Our negative gearing calculator can help compare the after-tax cash-flow effect, but confirm tax treatment with an adviser.
- If you're buying, don't confuse a cheaper property with an easier loan. The borrowing-power and APRA buffer explainer covers why a lower asking price may be offset by a smaller loan approval. Get a fresh assessment before bidding.
Our earlier three property-price scenarios for 2027 mapped out what a slow slide, sharper shock or recovery could look like. That was written before these September numbers, so treat its assumptions as historical, not today's forecast. The new fact is broader and simpler: the downturn has spread across nearly every capital-city suburb, while the latest borrowing-cost increase has yet to run through the market.
PropAlly helps you keep the numbers for each property, loan, rent payment and expense in one place, whether you use an agent or manage it yourself. In a falling market, knowing your own exposure is more useful than guessing the national bottom. Explore the portfolio command centre.
Data checked 2 October 2026. General information only, not financial, credit or tax advice. Index changes, illustrative loan calculations and analyst scenarios are not individual property valuations or predictions. Seek licensed advice for your situation.
