National home values fell 1.1% in September, the sixth straight monthly fall, according to Cotality’s Home Value Index. Values are now 5.2% below the March peak, and every capital city except Darwin recorded a fall (Cotality).
If you’re buying, selling or sitting on a mortgage, headlines like this raise a practical question: does it change what you should do about your loan? This article sets out what the numbers show, why it’s happening, and the options for different situations. It’s general information, so the right answer will depend on your own circumstances.
What the numbers say
Here are the headline figures from Cotality’s September index, released on 1 October:
| Measure | Result |
|---|---|
| National change in September | down 1.1% |
| Consecutive monthly falls | six |
| Below the March 2026 peak | 5.2% |
| Change over the September quarter | down 3.7% |
| Change over 12 months | 0.0% |
| National median value | $899,236 |
A few details sit behind those numbers. Brisbane recorded the sharpest fall of any capital at 1.5%, and Sydney fell 1.4%. Darwin was the only capital to rise. Over the year, national values are flat, because the falls since autumn have wiped out the gains from late last year. Regional markets have held up better, with regional values still 5.6% higher than a year ago (Cotality).
Prices aren’t the only thing slowing
Cotality’s October Housing Chart Pack shows the slowdown is showing up in how homes sell, not just in values. An estimated 39,747 homes sold nationally in September, down 20.9% on the same month last year. The median time to sell a property rose to 41 days from 26 days a year earlier. In the capital cities, vendor discounting reached 4.4%, its highest level in five years, and the four-week average auction clearance rate fell to 48.3% from 64.4% in late February (Cotality).
In plain terms, buyers have more time and more choice, and sellers are being asked to move on price.
Why it’s happening
Higher interest rates. The RBA has lifted the cash rate four times this year to 4.60%, the latest rise coming on 29 September (RBA). The big four banks passed the 0.25% increase on to variable loans from 9 October (MPA). Westpac and ANZ estimate that adds about $79 a month on a $500,000 loan.
Lower borrowing capacity. Lenders assess your repayments at 3 percentage points above the actual loan rate (APRA). Every rate rise therefore lowers how much a buyer can borrow. Cotality estimates the four rate rises this year have cut a typical household’s borrowing power by about $90,000, which limits what buyers can pay.
Policy changes and confidence. The ABC reports that experts point to higher interest rates and cuts to housing tax breaks as reasons the market could fall further (ABC News).
More falls may follow. Cotality’s research director, Tim Lawless, expects values to keep falling into 2027, and has said a fall of 10% to 15% nationally is a fairly reasonable estimate. That is one expert’s forecast, not a certainty, and different parts of the country will move differently.
So, should you get a loan now?
There’s no single answer, and anyone who gives you one without knowing your situation is guessing. What a falling market does is change the balance of risks. Here’s how some of the considerations stack up:
| Reasons some buyers move now | Reasons some buyers wait |
|---|---|
| More choice and less competition | Values may keep falling |
| More room to negotiate on price | Repayments could rise again if rates do |
| A pre-approval shows your real limit | Lenders may value a property below the price you agree |
| You may be buying for the long term | Your deposit and buffer may need to grow |
The questions that matter most are personal:
- Could you cover repayments if rates rise again? The next RBA decision is on 3 November, and September’s CPI is due on 28 October.
- Do you have a buffer after the deposit and costs? A loan you can only just service leaves little room for surprises.
- How long will you stay? Falls matter most if you might need to sell within a few years.
- Does your pre-approval still reflect today’s rates? One from earlier in the year was assessed at a lower rate, so your limit may be lower now.
Your options, depending on where you are
If you’re buying
Getting pre-approved tells you what you can borrow at today’s rates and assessment settings, without committing to a purchase. A larger deposit lowers your loan-to-value ratio, which can reduce or avoid lenders mortgage insurance. If you’re a first home buyer, check the schemes available where you’re buying, including stamp duty concessions. Our guide to stamp duty by state sets out what applies, and our first home buyers page covers the other schemes.
If you own your home
With rates higher, the gap between what you pay and what lenders offer new customers is worth checking. A refinance isn’t always the answer, but a review often is. Our refinancing page explains how it works, and our guide to what a comparison rate is shows how to compare the fees across loans. If you want to reduce interest, extra repayments or an offset account can help. Check your loan allows extra repayments first, as some fixed loans cap them.
If you have equity you’re thinking of using
Falling values shrink your usable equity. The usual formula is 80% of your property’s value minus what you owe, so every dollar lost in value takes 80 cents off what you can borrow against. If you were planning to use equity for a renovation, a deposit or an investment, recheck the number with a current estimate of value. Our guide to home equity release explains how to work it out.
If you’re an investor
Higher rates squeeze cash flow, and falling values affect your equity. Lenders also apply a conservative assessment to investment borrowing. Our investment loans page covers how lenders currently assess it. Cotality’s data shows gross rental yields rose to 3.85% nationally, their highest since August 2019, as values declined, though yields vary widely between markets.
If you’re selling
Pricing realistically matters more in a market where homes take 41 days to sell. If you’re buying your next home first, a bridging loan can help you avoid a rushed sale, but it’s worth modelling the costs carefully.
What lenders look at in a falling market
Three things tend to matter more when values are falling:
- Valuations. A lender’s valuation may come in below the price you’ve agreed. If it does, you may need more cash or a smaller loan. Ask your broker how this would work before you sign a contract.
- Loan-to-value ratio. Falling values push your ratio up, which can affect pricing and whether lenders mortgage insurance applies.
- Serviceability. Your income and expenses are assessed against the buffer rate, so your borrowing capacity depends on rates at the time you apply.
A simple checklist
- Work out what you can borrow at today’s rates.
- Stress test your repayments against another rate rise.
- Get a current estimate of any property’s value, including your own.
- Compare lenders, as rates, fees and policies vary widely.
- Speak to a broker before you commit to a contract.
What to watch next
Three dates are worth noting. September’s CPI is due on 28 October. The RBA’s next decision is on 3 November. Cotality’s October Home Value Index is due in early November, and will show whether the sixth fall becomes a seventh.
Talk to us
If you’re weighing up a loan, a refinance or a purchase in this market, the hfinance team can compare across 50+ lenders and show you what’s realistic for your numbers. Try our home loan calculator for a first look, or get in touch to talk it through.
This article is general information only and does not take into account your personal financial situation or objectives. It is not financial advice. Figures are as reported at the time of writing and may change, and forecasts are opinions, not guarantees. Examples are illustrative. Speak with an hfinance broker before making any lending decisions.