Property Market Update: September 2026

How far, how fast

National dwelling values fell a further 0.9% in August, the fifth consecutive monthly decline, and now sit 3.6% below the March peak. Melbourne fell 1.1% in August and 3.9% over the quarter, and values are now 4.7% lower than a year ago. Sydney is falling faster still, down 1.4% in the month and 7.1% from its February peak, which is steeper than the same point in the 2022-23 correction. By that measure this is one of the sharpest downturns on record.

Two things stand out. First, it is national. Brisbane, Adelaide and Perth held up through the first half of the year and all fell in August. Over winter 93% of capital city suburbs recorded a decline, up from 46% in autumn. Second, it is now at every price point. Earlier in the year the falls were concentrated in the most expensive quarter of the market while the cheapest quarter held firm. That gap has narrowed, and both the upper and lower ends are now declining as affordability pressure and weaker demand spread.

Would be Vendors are holding listings back

New listings coming to market are 6% below the same time last year and 8% below the five-year average. Total advertised stock looks high, 24% above a year ago, but that is because properties are taking longer to sell, not because more vendors are listing. Sales volumes are down 15.5% year on year and auction clearance rates have sat below 50% since late May.

We are seeing the same thing in our own business. Enquiries to our Vendor Advocacy team and our sales partners have fallen sharply over the past two months, and the number of LongView clients choosing to sell their investment property has roughly halved compared with the first half of the year. Those who are selling generally need to. Discretionary vendors, who can wait to see this cycle through, are sitting tight.

That matters because it is how downturns find their floor. Prices fall fastest when motivated sellers meet scarce buyers. When would-be vendors withdraw, the pool of properties competing for those buyers shrinks. Days on market will keep stretching for stock that is already listed, and discounting will widen for vendors who have to sell, but the shrinking flow of new listings provides a natural cushion to the pace of the fall.

The rental market: tight, with softer pockets

Rents nationally are 5.7% higher than a year ago, vacancy remains under 2%, and Melbourne’s gross rental yield has climbed to 4.0%, the highest of the three big capitals. Nationally yields are the highest they have been since 2019.

Across our own Victorian portfolio, rent increases so far this calendar year have averaged 5.6%.

The headline does hide two softer pockets though. The first is the premium end and inner city apartments. The second is Melbourne’s north and west growth corridors, in suburbs such as Tarneit, Truganina, Deanside, Sunbury and Wyndam Vale. Properties in these areas are not increasing at all due to new rental supply hitting the market.

Whilst vacancy is still tight, pricing a property correctly from day one now matters more than it did a year ago, and a good renter on a fair rent is worth more than four weeks of vacancy chasing an extra $20 a week.

Rates and inflation

Inflation is still a persistent problem for the RBA. Headline CPI eased to 3.5% in July but the trimmed mean, the RBA’s preferred measure, is stuck at 3.6%, well above the 2% to 3% target. The cash rate has already been lifted three times this year to 4.35%, and most economists now expect at least one more increase before year end, with some tipping two. NAB expects a move at the 29 September meeting, and ANZ and CBA expect November, which would take the cash rate to 4.60%.

The flip side: the economy is still strong

Unemployment was 4.5% in July, close to full employment by any historical standard, with 14.8 million Australians in work and the number of filled jobs still growing. Household budgets are stretched but incomes are holding up.

Confidence is the missing ingredient

There is no denying that buyer and investor confidence is very low. The Westpac-Melbourne Institute consumer sentiment index sits at 88.9, well below the 100 mark where optimists and pessimists balance. The house price expectations index dropped from 118 to 111 in a single month, and 59% of households expect mortgage rates to rise further.

Layered on top is political uncertainty. Will the Budget’s negative gearing and capital gains changes survive in their current form? What does the rise of One Nation, now polling around a quarter of the primary vote with a 130,000 net migration target, mean for student and migration numbers, and therefore for rental demand? Add general economic uncertainty and it is easy to see why buyers are sitting on their hands.

With all that doom and gloom, a few things worth remembering

1. Prices reflect expectations more than the present. Markets price the future. Values fall when buyers expect things to get worse, not because they are worse today. If sentiment turns, or even if the current uncertainties simply level out, we would expect conditions to normalise. In Victoria, the state election on 28 November is one obvious point where some of that uncertainty gets resolved, whichever way it goes.
2. The equity cushion is enormous. Australian households own residential land and dwellings worth about $13 trillion against $3.3 trillion in housing debt. That is roughly $9.7 trillion of equity, most of it in the family home and in investment properties held by ordinary Australians. Whatever your politics or your view on house prices, it is untenable for a government of any persuasion to oversee sustained falls in the value of the biggest asset most voters own. Political pressure to respond will build quickly, and governments have plenty of levers.
3. Some correction is natural. Brisbane values are up 84% in five years, with Perth up 93% and Adelaide up 83%. After a run like that, a pause is healthy, and Brisbane is still 10.8% higher than a year ago even after recent falls. Melbourne never had that run, indeed Melbourne prices are where they were 5 years ago.
4. Be fearful when others are greedy, and greedy when others are fearful. Warren Buffett’s line is worth remembering. It is not a call to rush in, but for a long term investor a market with falling prices, rising rents, and very little competition looks quite different to the one we had two years ago. The best buying is rarely done when everyone agrees it is a good time to buy.

If you are weighing up your next move

If you are thinking about selling, talk to us before you list. Our Vendor Advocacy team can tell you frankly whether now is the right time and, if it is, how to position the property in a buyer’s market.

If you need to release equity without selling, HomeFlex is now available for investment properties as well as homes. And if you would rather ride out the cycle, the best thing you can do is make sure your property is priced to market and let well, so the rental income keeps working while values find their footing.

As always, your property manager is the best first call.