Home values fall 1.2% in October as capital city yields reach an 11-year high of 3.77%

Australian home values fell 1.2% in October, according to Cotality's national Home Value Index, the seventh monthly fall in a row. The index is now 6.7% below its March peak, a drop of about $63,400 on the median dwelling.

Rents are still rising, though more slowly, so gross rental yields keep climbing. Across the combined capitals the yield reached 3.77% at the end of October, the highest since May 2015. The figures were published on 2 November, the day before the RBA lifted the cash rate to 4.85%.

-6.7%

The city by city picture

Source: Cotality Home Value Index, dwellings, to 31 October 2026.

Sydney is now 10.1% below its February peak and Melbourne values are 7.3% lower than five years ago. Cotality's research director Tim Lawless said the mid-sized capitals "are now well and truly in a correction", and that "virtually every suburb across Brisbane, Perth and Adelaide has recorded a drop in values over the past three months".

Regional markets are holding up better. Combined regional values fell 0.7% in October but are still 3.4% higher than a year ago.

Rents are slowing, yields are rising

Cotality says the 0.9% seasonally adjusted rise in national rents over the three months to October was the smallest since January 2025. Its national vacancy rate rose to 2.3%, close to the decade average of 2.4%, and vacancies were higher than a year ago in every capital except Darwin.

Lawless put the slowdown down to demand. "Renters are likely to be approaching a ceiling on their capacity to pay more, following a 52% surge in rents over the past six years," he said, adding that slower overseas migration has probably taken some heat out of demand.

Higher yields are mostly the result of falling values, not faster rent growth. Lawless was blunt about what they mean: yields are "still nowhere near the levels needed to deliver a neutral or positive cash flow". He pointed to investor mortgage rates close to 7%, and to insurance, strata fees, taxes and maintenance costs that have all risen.

Cotality's vacancy rate uses a different method from SQM Research's, so the two are not directly comparable. SQM's October vacancy figures are due in mid-November.

A buyer's market with few buyers

Cotality estimates home sales over the past three months were 23% lower than a year earlier, and 18% below the previous five-year average. Sydney sales were down 30% and Brisbane 29%.

Capital city listings are at their highest level for this time of year since 2019, even though fresh listings are almost 18% below average, because homes are taking longer to sell. "Buyers have a lot more stock to choose from, they have more leverage," Lawless said, "but despite this being a buyer's market, they are noticeably absent."

Auctions tell the same story. Cotality's preliminary combined capital city clearance rate for the week ending 1 November was 47.2% across 1,735 auctions, Bloomberg reported, the lowest early result since April 2020. Preliminary results are usually revised down when the final figures come out on Thursday: in the week to 25 October, the final result was 43.6%.

What this means for landlords

1. Separate the yield from the cash flow. A 3.9% gross yield on a property bought with a 7% loan does not pay its way. Work out your net position after interest, rates, insurance, strata and maintenance.
2. Price renewals on evidence. Vacancies are rising and rent growth is slowing. Check what comparable homes near you have actually leased for in the past month before proposing an increase.
3. Plan for a longer vacancy. If a lease ends over summer, allow for more days on the market than last year and start advertising early.
4. If you are selling, expect to negotiate. Median selling times of 39 days and average discounts of 4.7% mean vendors are meeting the market. Our article on spring auctions covers the trade-offs.
5. If you are buying, take your time. Buyers have more choice and less competition, but the purchase still needs to work at today's interest rates and under the negative gearing changes for established homes.