By the numbers (September 2026)
| Measure | Result |
|---|---|
| National dwelling values, September quarter | -3.7%, the largest quarterly fall since September 2022 |
| Sales volumes, three months to September vs a year ago | -17.4% |
| Median time on market | 47 days, up from 23 days a year ago |
| Total listings nationally | 145,573, up 19.1% year-on-year |
| Median vendor discount | 4.3%, up from 3% a year ago |
Inflation still running too hot
The latest inflation data for August 2026 showed headline inflation 1.4 per cent higher over the past three months and four per cent higher over the year. The RBA's preferred measure of underlying inflation was one per cent higher over the quarter and 3.6 per cent higher over the year. Monthly growth did slow for both measures, but both still show an inflationary pulse that is too strong. Annual inflation remains well above the RBA's target range, which is the reason for the latest interest rate hike and why expectations of future hikes persist.
Households start to tighten their belts
The Monthly Household Spending Indicator for August 2026 was unchanged over the month, with discretionary spending falling 0.3 per cent. It is only one month of data, but heightened inflation and cost-of-living pressures may finally be prompting households to curtail spending. Spending is still up 6.8 per cent over the year, with discretionary spending 7.2 per cent higher. With another rate increase in September, this could be a turning point worth monitoring over the coming months.
Consumer sentiment remains weak and deteriorated further after the rate increase, with Westpac reporting a significant slump among respondents surveyed after the RBA decision. Surprisingly, respondents were slightly more positive about it being a good time to buy a dwelling, and expectations of home price increases rose.
Labour market easing
Employment fell in September and the unemployment rate rose to 4.7 per cent, the highest since October 2021. Historically, unemployment remains low, but I expect it to continue trending higher and employment growth to slow.
Record construction pipeline
ABS Building Activity data for the June 2026 quarter showed the construction pipeline at a record high, although volumes remain well below the Housing Accord target.
Commencements: 52,201 dwellings, up 7.0 per cent over the quarter and 14.4 per cent year-on-year. Commencements have now been higher than a year earlier for eight consecutive quarters.
Completions: 47,168 dwellings, the most since December 2019. Completions rose 5.8 per cent over the quarter and 15.9 per cent over the year, the largest annual increase since March 2017.
Under construction: 248,733 dwellings, the most ever recorded in Australia, up 1.9 per cent over the quarter and 10.8 per cent over the year. This should keep completions high and possibly rising.
Values falling faster than first reported
According to Cotality, national dwelling values fell 1.1 per cent in September 2026, the third consecutive month of falls greater than one per cent. July and August declines were revised to be larger, suggesting initial estimates have been understating the reality.
Capital cities (-1.2 per cent) continued to record larger monthly falls than regional markets (-0.7 per cent). Darwin and regional Western Australia were the only markets to avoid falls. Over the quarter, capital city values fell 4.3 per cent and regional values 1.9 per cent. The downturn is both broadening and accelerating.
Tax changes to investment property, earlier rate increases, the latest hike and the prospect of more are maintaining downward pressure on prices, and there is seemingly nothing imminent likely to reverse these conditions.
Fewer sales, fewer new listings, more stock
Sales volumes over the three months to September were 17.4 per cent lower than a year earlier, with capital cities (-20.8 per cent) down further than regional markets (-11.1 per cent). Only Hobart, Canberra and regional Northern Territory recorded increases.
New listings are low for the time of year: 36,440 over the four weeks to 11 October, 7.9 per cent fewer than a year ago and 11.9 per cent below the five-year average. Vendors are holding back in what is typically the busiest listing period of the year.
Yet total listings keep mounting as fewer properties sell and those that do take longer. Total listings reached 145,573, up 19.1 per cent year-on-year and 2.7 per cent above the five-year average. Brisbane (+60.4 per cent), Adelaide (+50.7 per cent) and Perth (+64.7 per cent) have seen the sharpest rises in stock for sale.
Longer selling times and bigger discounts
Median time on market reached 47 days in September, the highest since January 2022 and up from 23 days a year earlier. Capital cities more than doubled from 21 to 43 days, while regional markets rose from 29 to 52 days. Darwin was the only market with a shorter time on market than a year ago.
The median vendor discount rose to 4.3 per cent from 3.0 per cent. Capital city discounts widened to 4.5 per cent (from 2.8 per cent) and regional discounts to 4.1 per cent (from 3.3 per cent). The largest discounts are in Brisbane, Hobart and Sydney. I expect both the size of discounts and the number of properties selling below their original list price to keep increasing.
Rents and yields
Fears that investment tax changes would drive stronger rental growth have not yet materialised. National rents rose 0.5 per cent over the September quarter, down from 1.6 per cent the previous quarter, and annual growth slowed from 5.9 to 5.5 per cent. Longer term, lower housing investment is likely to reduce rental supply and build pressure, but there is no evidence of this yet.
The national gross rental yield rose to 3.9 per cent, up from 3.6 per cent a year ago and the highest since August 2019. Capital city yields are 3.7 per cent (from 3.4 per cent) and regional yields are unchanged at 4.3 per cent.
Outlook
The heightened volume of stock for sale, despite fewer new listings, shows how much buyer demand has reduced. With another rate increase just announced, conditions are likely to deteriorate further, with additional falls in home values and fewer transactions.
The data is now lagging what is happening on the ground, as the ongoing revisions to value declines show. That is why up-to-date insights from the nation's largest network of valuation professionals, who inspect, value and talk with buyers, vendors and agents every day, are so important.