Property Downturn Poised to Be Largest in 40 Years

Australian Home Values Fall as Melbourne Buyers Gain Greater Negotiating Power

Australia's housing market continued to weaken in September, with Cotality's national Home Value Index falling **1.1% during the month** — the sixth consecutive monthly decline.

National dwelling values are now **5.2% below their March 2026 peak**, highlighting the growing impact of higher interest rates and reduced borrowing capacity across the property market.

Melbourne also remained under pressure, with dwelling values falling **0.7% in September**, according to Cotality.

For buyers looking across Melbourne's western growth corridors, softer market conditions may create greater negotiating opportunities, particularly where vendors are motivated or properties have remained on the market for longer.

However, lower property prices do not necessarily mean improved affordability. Higher mortgage rates are reducing borrowing capacity and increasing repayments, meaning first-home buyers should carefully assess their finance position before entering the market.

For property investors, the changing environment requires even greater caution. Rather than purchasing based solely on expectations of capital growth, investors should consider rental demand, vacancy rates, holding costs, infrastructure development, local housing supply and the long-term prospects of individual suburbs.

Cotality Research Director Tim Lawless has indicated that Australian housing values could continue declining into **2027**, with the eventual depth of the downturn heavily influenced by future interest-rate movements.

For prepared buyers, a softer market can create opportunities — but property selection, finance preparation and negotiation strategy remain critical.