Home values fall for a sixth straight month: what Cotality's September data means for first home buyers

Cotality's October Home Value Index, covering September 2026, shows national dwelling values fell 1.1% over the month, the sixth straight monthly decline. Values are now around 5.2% below the record high set in March 2026. The release landed days after the Reserve Bank lifted the cash rate to 4.60%, so first home buyers are watching falling prices and rising borrowing costs at the same time. Here is what the data says and what it may mean for your planning.

What the September data shows

The fall was broad. Brisbane recorded the sharpest monthly drop among the capitals at approximately 1.5%, just ahead of Sydney at approximately 1.4%. Darwin was the only capital to avoid a fall. Cotality reported that around 97% of capital city suburbs have recorded lower values over the past three months.

• Annual picture: national values are roughly flat over 12 months, but Sydney is down approximately 7.0% and Melbourne approximately 6.2% on a yearly basis.
• Regional resilience: regional dwelling values are up approximately 5.6% over the year, so the capital city and regional markets are moving very differently.
• Higher-priced homes lead the fall: upper quartile houses in Sydney and Melbourne are reported to be down by more than 10% from their peaks.
• Fewer new listings: freshly advertised homes are tracking about 6% below a year ago, which suggests sellers are holding back rather than rushing to sell.

Why falling prices are not the whole story

A lower purchase price does not automatically make a home easier to finance. When the cash rate rises, lenders generally assess borrowers at a higher rate as well, which can reduce the amount a lender is willing to offer. A buyer whose borrowing capacity falls by more than the price of their target homes has fallen may find that affordability has not improved. Variable repayments on an existing loan also rise when rates do, which matters if you are weighing up how much buffer to keep.

Markets also tend to move in cycles that are hard to time. Nobody can say whether values will keep falling, stabilise or recover, and the figures above are market-wide averages rather than a forecast for any particular suburb or property.

Economists quoted in recent coverage have said further rate rises are possible in the coming months, with the next RBA meetings scheduled for November and December. That uncertainty is one reason many buyers are focusing on repayment buffers as well as the sticker price, and why it can help to revisit your numbers after each rate decision.

What this means for first home buyers

This is general information, not advice about your own situation. A mortgage broker or financial adviser can look at your full circumstances. Some things you may want to think through:

• Test your budget at higher rates. If rates rose again, could you still comfortably meet repayments? Running a few scenarios can show how much room you have.
• Check your borrowing power on current assumptions. Lender assessment rates and buffers change, so an estimate from earlier in the year may be out of date.
• Compare local conditions. With capitals and regions diverging, the market where you plan to buy may look quite different from the national headline.
• Keep your deposit plan flexible. If prices ease in your target area, your deposit goal and the schemes you may be eligible for could look different, and the official scheme provider makes the final eligibility decision.

Run the numbers

Use these tools to explore how the current market may affect your situation. Results are estimates based on the assumptions you enter:

• Borrowing Power Calculator - see an illustrative estimate of how much you might be able to borrow at today's assessment rates.
• Interest Rate Shock Tester - see how your repayments could change if rates rise further.
• Rent vs Buy Calculator - compare scenarios if you are deciding whether to wait or buy.