Property · updated 7 Oct 2026
Property price forecast: where are home values heading?
Australian home values fell 1.1% in September, the sixth monthly fall in a row, and are 5.2% below their March peak. On the settings below, the model has national values -2.2% over the next 12 months, to a median of $879,097. Choose a city and move the levers to test your own view.
Your scenario
Next 12 months
-2.2%
Further falls
| Median value today | $899,236 |
|---|---|
| In 12 months | $879,097 |
| In 24 months | $901,811 |
| Bottom of the path | -3.0% after 6 months |
| Repayment, 80% loan today | $4,542 |
| Same purchase in 12 months | $4,441 |
Recent momentum (-1.2% a month) drives the first months, then fundamentals take over: +2.6% a year from wages and the housing balance.
Repayments on this purchase Stamp duty by state How much can I borrow?
- Cotality median, past 12 months
- Modelled path
Every capital city on these settings
| Market | Median | Past month | Past year | From peak | Model, next 12m |
|---|---|---|---|---|---|
| Australia (national) | $899,236 | -1.1% | 0.0% | -5.2% (Mar 2026) | -2.2% |
| Combined capitals | $973,525 | -1.2% | -1.8% | -6.4% (Mar 2026) | -2.9% |
| Combined regional | $758,931 | -0.7% | +5.6% | -2.2% (May 2026) | -0.2% |
| Sydney | $1,198,596 | -1.4% | -7.0% | -8.6% (Feb 2026) | -3.5% |
| Melbourne | $780,550 | -0.7% | -6.2% | -7.5% (Mar 2022) | -1.9% |
| Brisbane | $1,048,880 | -1.5% | +5.9% | -5.4% (May 2026) | -3.3% |
| Adelaide | $928,560 | -1.3% | +6.5% | -2.9% (May 2026) | -1.1% |
| Perth | $975,022 | -1.2% | +10.1% | -6.0% (Apr 2026) | -3.3% |
| Hobart | $741,496 | -0.5% | +7.0% | -2.0% (Mar 2022) | +0.6% |
| Darwin | $633,431 | +0.4% | +11.9% | -0.2% (Jul 2026) | +2.5% |
| Canberra | $861,744 | -1.1% | -1.6% | -6.2% (May 2022) | -1.7% |
Values, changes and peaks: Cotality Home Value Index, results to 30 September 2026. All dwellings. The last column moves with the levers above.
What is happening in the market
- Sales are down 19.1% on a year ago over the past three months, and listings on the market are up 23.1%, so buyers have more choice and less urgency.
- Rents are still rising, 5.5% over the year, but the vacancy rate has climbed to 2% from a record low of 1.5% in February. The pre-COVID average was 3.3%.
- The cash rate is 4.60% after four rises this year, and every rise cuts borrowing power by about 2.1%.
- Building is behind target. About 175k homes a year are being finished against the 240k a year the Housing Accord needs, which supports prices over the longer run.
Sources: Cotality, ABS population, ABS building activity.
What the banks are forecasting
Westpac (25 Sept 2026): 7.3% peak-to-trough fall; five-capital prices down 6% in 2026, then up 3% in 2027. Sydney -10% and Melbourne -8% in 2026. Source.
Common questions
Are house prices falling in Australia?
Yes. Cotality's national index fell 1.1% in September 2026, the sixth monthly fall in a row, and values are 5.2% below the March 2026 peak. 97% of capital city suburbs fell over the three months to September. Darwin was the only capital still rising.
Will house prices keep falling in 2027?
Westpac expects a 7.3% peak-to-trough fall, then a 3% recovery in 2027. On default settings our model has national values -2.2% over the next 12 months, bottoming after about 6 months. Another rate rise, or the slide lasting longer, pushes the trough later and deeper.
How much do interest rates affect house prices?
Through borrowing power. Lenders test a loan at the rate plus a 3-point buffer, so each 0.25 point rise cuts what a buyer can borrow by about 2.1%. The model assumes half of that reaches prices within a year; you can change that share.
Which capital city is falling the most?
Over the three months to September: Sydney -4.9%, Brisbane -4.7%, Perth -4.7%. Sydney is furthest below its peak, -8.6% since Feb 2026.
How the model works
- Momentum. Each market starts at its average monthly change over the past quarter, and that pace halves every few months (your "how long the slide lasts" setting).
- Fundamentals. As momentum fades, growth hands over to wage growth, adjusted for the housing balance: new households (population growth ÷ 2.5 people per home) minus homes completed, as a share of about 11.2 million dwellings.
- Borrowing power. A change in mortgage rates changes the maximum loan by the exact serviceability maths (rate plus the 3-point APRA buffer, 30 years). Your chosen share of that change reaches prices, spread evenly over 12 months.
- Every city gets the same national fundamentals. In reality Perth and Brisbane have had faster population and income growth than Sydney and Melbourne; the city's own momentum is the only local input.
- It does not know about investor tax changes, first-home buyer schemes, credit limits or sentiment shocks.
A scenario tool, not a forecast and not financial advice. It shows what these assumptions imply, nothing more. Get advice from a licensed professional before buying or selling. See our methodology.