The property market has continued to soften, with Sydney recording the largest drop while more than 90 per cent of suburbs across the combined capitals have declined, according to the latest data.
Home values have declined across the nation, with all capital cities bar Darwin recording a drop in prices over the previous three months.
The latest data from Cotality’s Home Value Index Update for September found the proportion of suburbs recording a decrease in home values had more than doubled from autumn to winter.
In winter, the national share of suburbs recording a drop in dwelling values skyrocketed to 93 per cent, up from 45.8 per cent in autumn.
Broadly, national dwelling values fell by 0.9 per cent in August, marking the fifth consecutive month of decline, leaving properties 3.6 per cent below their peak price reached in March 2026.
Cotality research director Tim Lawless said the data showed the recent downturn was no longer confined to select markets or higher-valued segments.
“What started as a more concentrated easing across higher-value segments has now become a much more generalised softening, with the vast majority of the capital city suburbs recording some level of decline.
Latest data showed that Sydney led the way in the pace of decline across the nation, with values down 1.4 per cent in August, bringing values 7.1 per cent below the February peak.
Lawless said the rate of decline seen in Sydney home values was outpacing the price correction seen in 2022–2023.
“The combination of a sharp drop in demand and higher than average advertised stock levels is weighing more heavily on Australia’s largest housing market,” Lawless said.
Right Property Group director Victor Kumar said that despite the downturn being broad-based, markets were still operating at different speeds.
“In NSW, there is definitely a three-tiered market. One is that the high-end is still very much alive and kicking and no price reductions,” Kumar said.
“In the middle – in your $2 million to $10 million price bracket – there’s definitely price reductions to the tune of up to 20 per cent.”
Kumar said that the affordable end of NSW’s property market had seen a price reduction of around 8 per cent.
Capital city performance
While Sydney led the way in property decline, the poor performance was evident across almost all of Australia’s capital cities.
Melbourne and Canberra recorded the second-largest decline, dropping by 1.1 per cent in August, while Brisbane saw a drop of 1 per cent.
To capitalise on the decline, Kumar said there was an opportunity for investors targeting the right area or property type.
He said the standout in Brisbane was the townhouse market in Logan.
“Pre-budget, they were selling for $650,000. Now, the very same properties are selling for $540k to $580k depending on the condition, with rents also rising,” Kumar said.
Dwelling values in the booming mid-sized capitals of Adelaide and Perth fell by 0.8 per cent,
Conversely, Darwin was the only capital city to record a positive result over the month, with property values climbing by 0.6 per cent.
Similarly, values in the Northern Territory capital were the only ones to resist the downturn over the quarter, rising by 0.9 per cent.
What it means for the market
Similarly, Lawless said the narrowing performance gap between the upper and lower quartiles was a sign of the downturn broadening.
“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,” he said.
“The softer trend in values is underpinned by weaker transaction activity. Sales columns are tracking well below both year-ago levels and the five-year average, which points to a clear reduction in buyer demand.”
More broadly, Kumar said that real estate professionals had seen market confidence soften before their very eyes.
“All agents are reporting that the volume of stock is still consistent. However, the number of buyers is definitely reducing,” he said.
Lawless said that while Spring would normally bring a seasonal lift in the supply of homes coming to market, this year’s rise would likely be more moderate.
“Challenging selling conditions and the prospect of further falls in value are likely to discourage some prospective vendors from testing the market,” he said.
“This supply side response may become more apparent if selling times continue to lengthen and vendors become less confident in achieving their price expectations.”
He said that, overall, the market would remain under downward pressure over the coming months.
According to Lawless, the potential for another rate rise, pessimistic sentiment, and a gradually loosening labour market were all indicators that demand was likely to soften as the year progressed.
“However, persistently low levels of new housing supply, a still relatively low unemployment rate and targeted support for first home buyers should help to limit the magnitude of value declines, reducing the risk of a more significant correction,” Lawless said.
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