Australia's Housing Downturn: Sept 2026 Property Update

In this episode of the Follio Property Podcast, hosts Lachlan Delahunty and Reece Beddall review Australia’s real estate market performance for September 2026, breaking down a nationwide price decline led by sharp drops in Brisbane and Sydney. The co-hosts debate interest rate projections, specifically addressing RBA rate moves and November rate hike expectations, while analysing capital city trends, local economic cushions like mining and defense, rising building costs and the growing risks in investor-driven suburbs.

Key Takeaways & Market Insights

• National Housing Market Downturn: Australian housing values fell 1.1% in September 2026, dropping 2.7% overall from their peak.
• Brisbane and Sydney Lead Price Falls: Brisbane led the downturn with a 1.5% drop in September, which resulted in a 16.6% price drop,while Sydney fell 1.4% for the month and sits 8.6% below its peak.
• Rate Rise Disagreement: Despite markets pricing in a 91% to 92% chance of a November RBA cash rate hike following the September increase, host Lachlan predicts no rate rise will occur in November.
• Melbourne Outperforms Major Capitals: Melbourne dropped by 0.7% in September, showing signs of flattening decline with a rolling four-week average drop of just 0.16% per week.
• Darwin as the Sole Winner: Darwin was the only capital city to achieve positive price growth in September (+0.4%), supported by low vacancy rates (0.4%), low days on market and high defense and project-based employment.
• Diverging Building Approvals: New South Wales and Queensland saw monthly building approvals plummet between 17% and 22%, whereas South Australia surged by 24% due to stamp duty exemptions for first-home builders.
• Risks in “Investment Belt” Suburbs: Outer-fringe investor-dominated markets (e.g., Armadale, Alkimos and Rockingham in Perth) are seeing days on market rise to 40–60 days as borrowing capacity shrinks and investor demand dries up.

Steep National Market Decline Led by Brisbane and Sydney

Australian housing values fell 1.1% in September 2026, putting overall values down 2.7% from their peak as major markets take sharp downturns. Brisbane recorded the steepest monthly fall among capital cities at -1.5%, which resulted in a 16.6% decline, while Sydney dropped 1.4% for the month.

“So from a national level, we saw a 1.1% drop across the board. So just to give people context on that, that’s down 2.7 from the peak.” Lachlan Delahunty

“So if I’m looking at the figures for last month, Sydney is down 1.4%. Brisbane, 1.5% leading the charge with the biggest price decrease.” Lachlan Delahunty

“That 1.5% monthly drop in Brisbane analyses a 16.6% decline. We’re looking at, between the markets, anywhere from negative 10 to 16% growth, which we know would put us in the largest downturn that the country’s ever experienced.” Lachlan Delahunty

“Sydney is down 8.6% from its peak and likely to push well past 10%, landing around 11 to 12% for 2026.” Lachlan Delahunty

Contrarian Call on November Interest Rates

Despite money markets pricing in an over 90% probability of an RBA rate hike in November following September’s rise, host Lachlan firmly predicts interest rates will remain on hold. He argues that the RBA’s hawkish commentary is designed to curb consumer spending without needing to execute another hike.

“So the markets have priced in a 91% increase in interest rates.” Lachlan Delahunty

“And there’s reasons today we’re talking about September and there’s reasons why it’s still firm that we won’t see another November rate rise.” Lachlan Delahunty

“The RBA alluded to the fact that most definitely or in their comments setting everyone up, that there will be a November rate rise. They have to do that because they need to change consumer behaviour.” Lachlan Delahunty

“So I do stand by the fact that I don’t believe there’s a rate rise in November.” Lachlan Delahunty

Employment and Wages Cushion Markets Like Perth and Darwin

Strong local economic buffers, including mining, defense projects and infrastructure spending, are insulating cities like Perth and Darwin from worse downturns. These income cushions allow local buyers to service mortgages better than in overstretched markets, leaving Darwin as the only capital city to achieve positive monthly growth.

“The only market in Australia that hasn’t seen any negative growth last month was Darwin at 0.4%.” Lachlan Delahunty  

“When you look at Western Australia, you’ve got mining. The front page of the local paper today was about job wars because you’ve got mining competing with the military to try to get personnel, so they have to increase wages.” Lachlan Delahunty  

“Same in Brisbane, you’ve got an Olympics that’s still in preparation that the state government is competing with the private sector for trades and therefore wages increase, therefore they can afford more.” Lachlan Delahunty  

“So when sentiment does return to these markets and we know that every cycle is exactly that…these markets that can afford to pay more will and they’re the ones that sort of will bounce back quicker.” Lachlan Delahunty

Future Predictions & Market Outlooks

• Double-Digit Price Drops: Sydney’s total price decline is projected to push past 10%, likely settling between 11% and 12% for the full year of 2026.
• Interest Rate Hold in November: Contrary to cash rate futures pricing in a 91–92% chance of a rate hike, host Lachlan predicts the RBA will keep interest rates on hold in November.
• Faster Recovery for High-Wage Capitals: Suburbs and cities backed by strong wage growth and active infrastructure projects, such as Perth, Darwin and parts of Brisbane, are forecast to bounce back much faster once positive sentiment returns.
• Prolonged Weakness in Sydney and Brisbane: Sydney and Brisbane are expected to face extended downturns, with analysed drop rates remaining steep until interest rates or broader market sentiment shift.
• Elevated Risk in Outer-Fringe “Investment Belts”: Outer suburban markets heavily reliant on property investors are predicted to suffer prolonged stagnation and higher days-on-market as borrowing capacity contracts.

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