Australia’s housing market weakened further through August, with the national Home Value Index falling 0.9%, marking a fifth consecutive monthly decline. National dwelling values are now 3.6% below the market peak recorded in March, while annual growth has slowed to 2.7%.
Sydney and Melbourne remained the weakest-performing capital cities, with dwelling values declining 1.4% and 1.1% respectively in August. Values in Sydney are now 7.1% below their February peak, while Melbourne is down 6.8% from its peak in March 2022. Brisbane, Adelaide and Perth saw values drop by 0.8%-1.0% over the month, with Darwin the only capital to record an increase in house values, rising by 0.6%.
The downturn is increasingly broadening beyond premium housing and is reflected across 93% of capital city suburbs. This has reflected weaker buyer demand, higher borrowing costs and increased advertised stock. With homes taking longer to sell and vendor discounting increasing, buyers are gaining greater choice and negotiating power.
Source: Cotality Home Value Index, results as at 31 August 2026.
The balance between buyers and sellers is continuing to shift. Homes are spending longer on the market, with the national median selling period now 39 days, compared with 28 days at the same time last year. Capital city properties are taking a median 37 days to sell, while regional properties are averaging 42 days. Both are notably higher than a year ago, when the figures were 25 and 35 days respectively.
Price negotiations are also becoming more significant. Across the combined capital cities, the typical vendor discount has widened to 4.2%, while the regional market has reached 3.8%. Nationally, sellers are accepting prices around 4.0% below their original asking price, compared with approximately 3.1% at the beginning of the year.
Source: Cotality Monthly Housing Chart Pack September 2026.
For purchasers, this creates a more favourable environment. Additional time to assess properties, combined with a greater willingness from sellers to negotiate, means buyers are increasingly able to take their time and push for a price that better reflects current market conditions.
The number of properties advertised for sale has continued to rise, with the increase driven by slower sales and longer selling times rather than a surge in new listings. There were 139,167 properties on the market nationally over the 4 weeks ending September, 18.1% higher than a year ago and 2.2% above the five-year average.
The same period saw 34,486 additional properties listed for sale which is a slight increase from previous months, however remains 3.1% lower than a year ago and 6.4% below the five-year average. This suggests that properties are accumulating because homes are taking longer to sell, giving buyers more choice and greater negotiating power.
Source: Cotality Monthly Housing Chart Pack September 2026.
Despite softer conditions in the sales market, rental demand remains strong. National rents increased 5.7% over the past year, adding approximately $38 per week to the national median rental value. Rental growth remains broadly based, with combined capitals up 5.7% and combined regional markets up 5.8%.
The national rental vacancy rate edged higher to 1.9% in August but remains well below the pre-COVID decade average of 3.3%. Sydney's vacancy rate was 2.2%, while Adelaide remained the tightest mainland capital at 1.3%.
As rents continue to rise while home values fall, gross rental yields are increasing. The national gross rental yield reached 3.79% in August, its highest level since September 2019, while the combined capital yield reached 3.6%.
Source: Cotality Home Value Index September 2026.
Overall market conditions have become more balanced as property listings increase and buyers gain more choice. While values have moderated, demand remains supported by limited new housing supply and tight rental conditions.