Australia’s home-price slump deepens, set to extend into 2027

[SYDNEY] Australia’s housing market slump is deepening, with national prices in September retreating to levels last recorded a year ago due to weak demand from buyers.

Sydney prices have fallen almost 9 per cent from their February peak, taking the median price in Australia’s biggest city to about A$1.2 million (US$840,000), according to property consultancy Cotality’s Home Value Index. In September, Brisbane posted the largest monthly drop among major cities at 1.5 per cent, just ahead of Sydney’s 1.4 per cent, with the combined capitals reading sliding 1.2 per cent.

Australia’s housing market has been pummelled by higher borrowing costs and tax changes in the May budget that curbed concessions for property investors. Following a two-meeting pause, the Reserve Bank resumed raising interest rates this week and has increased its benchmark by 1 percentage point in 2026 to the highest level in 15 years. 

Some “97 per cent of capital city suburbs were down in value over the three months to end of September, highlighting the broadbased scope of this negative housing cycle,” said Tim Lawless, research director at Cotality. “The lift in available stock is improving choice for buyers, but ironically, many prospective buyers don’t have the confidence or financial capacity to buy at the moment.”

Capital city homes are now taking a median of 39 days to sell, compared with 23 days a year ago, resulting in an accumulation of advertised supply, Lawless said.

“Borrowers are not only facing higher mortgage costs, but also an extended period of elevated living expenses and negative real income growth,” he said. “Together, these pressures are narrowing the pool of buyers able to qualify for a mortgage and reducing the amount they can afford to pay.”

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Housing values are likely to continue falling into 2027 due to higher rates, though low supply and a resilient labour market should cushion against a severe crash, Cotality said.

At the same time, there’s been a slight improvement in the rental market, with the national vacancy rate reaching 2 per cent in September, the highest reading since January 2025. BLOOMBERG