Australia's property market softened through the September quarter, with higher borrowing costs weighing on property prices. At the same time, rents continued to rise, helping improve rental yields for property investors.

Key takeaways

• Property prices have weakened. Australian dwelling values fell 3.7% over the three months to September and were flat and unchanged over the past 12 months.
• Capital cities experienced the greatest weakness, falling 4.3% over the quarter and 1.8% over the year.
• Regional property remained more resilient, with values still 5.6% higher than a year ago.
• Sydney and Melbourne were the weakest major markets, with annual price falls of 7.0% and 6.2% respectively.
• Some markets still recorded strong annual growth. Perth was up 10.1%, Darwin 11.9%, Adelaide 6.5% and Brisbane 5.9%, although prices had begun falling in most of these markets during the September quarter.
• Rents continued to rise, increasing 5.5% nationally over the year. However, rental growth is starting to slow.
• Rental yields have improved. The national gross rental yield reached 3.85%, with regional areas averaging 4.3% compared with 3.7% across the capital cities.

What does this mean?

The property market is currently experiencing weaker capital growth but relatively resilient rental income. Results also vary considerably between locations, reinforcing that Australia is not one property market.

For property investors, recent conditions highlight the importance of focusing on the long-term fundamentals of a property, including location, rental demand, cash flow and the ability to comfortably manage borrowing costs, rather than placing too much emphasis on short-term movements in property prices.

Source: Cotality Housing Chart Pack October 2026

Annual change in Australian dwelling values to September 2026

Source: Cotality

Gross rental yields, September 2026

Source: Cotality

Important information

This article contains general information only and does not take into account your objectives, financial situation or needs. Tax outcomes depend on individual circumstances and the legislation applying at the relevant time. Consider obtaining appropriate financial and tax advice before acting.