The state of the rental market, September 2026: cash rate at 4.35%, a fourth rise tipped and yields at 3.79%

The Reserve Bank's cash rate is 4.35% after three rises this year, and all four major banks expect a fourth, to 4.60%, when the Board announces its decision on 29 September 2026. Rents are still rising and gross yields have climbed to 3.79%, their highest since September 2019. But vacancies are up on a year ago in Sydney and Canberra, and home values have fallen for five straight months. Interest rates and the rental market are pulling landlords in opposite directions this spring.

This is the first issue of The Weekly, our flagship read on the numbers that move landlords' cash flow. Everything below is as at 24 September 2026 and drawn from the RBA, ABS, APRA, Cotality, SQM Research and state government sources.

4.35%

The numbers that matter this month

Where the cash rate sits and what the RBA said

The RBA's cash rate target has been 4.35% since 6 May 2026. That followed three 0.25 percentage point rises this year, taking effect on 4 February, 18 March and 6 May, which reversed all three cuts made in 2025. The Board then held at its June and August meetings.

View data · Source: RBA cash rate target history

Month	Cash rate
Sep 23	4.10
Oct 23	4.10
Nov 23	4.35
Dec 23	4.35
Jan 24	4.35
Feb 24	4.35
Mar 24	4.35
Apr 24	4.35
May 24	4.35
Jun 24	4.35
Jul 24	4.35
Aug 24	4.35
Sep 24	4.35
Oct 24	4.35
Nov 24	4.35
Dec 24	4.35
Jan 25	4.35
Feb 25	4.10
Mar 25	4.10
Apr 25	4.10
May 25	3.85
Jun 25	3.85
Jul 25	3.85
Aug 25	3.60
Sep 25	3.60
Oct 25	3.60
Nov 25	3.60
Dec 25	3.60
Jan 26	3.60
Feb 26	3.85
Mar 26	4.10
Apr 26	4.10
May 26	4.35
Jun 26	4.35
Jul 26	4.35
Aug 26	4.35
Sep 26	4.35

In its 11 August statement, the Board said inflation was still too high and was not expected to return to around the middle of the 2 to 3% target band until late 2027. It pointed to higher oil prices flowing through to other goods and services after the Middle East conflict, alongside capacity pressures at home, and said there were upside risks to its inflation projection. It judged policy to be somewhat restrictive and said it would raise rates further if those upside risks materialised.

The same statement noted that momentum in the housing market had shifted, with prices falling in some capitals and new housing loans declining noticeably. The August Statement on Monetary Policy put the national price fall from the March peak at 1.6% at that point and attributed it to the rate rises, the tax changes announced in the 2026-27 Budget, and weaker sentiment.

The RBA's forecasts, finalised on 5 August, have headline inflation at 3.6% by December 2026 and trimmed mean inflation at 3.3%, not reaching 2.5% until 2028. Unemployment is forecast to rise from 4.4% to 4.8% by the end of 2028. The forecasts assumed a cash rate path based on market pricing at the time, with the cash rate at around 4.5% through 2027.

Since then, the data has run hot. The ABS monthly CPI showed headline inflation easing to 3.5% in the year to July, but trimmed mean inflation stayed at 3.6%, and prices rose 1.0% in the month of July alone (0.6% seasonally adjusted). Answering audience questions at a CEDA fireside chat in Sydney on 22 September, Governor Michele Bullock said an unemployment rate of between 4.5% and 5% would probably take enough heat out of the labour market to ease pressure on inflation.

What markets and the major banks expect

When the RBA published its August Statement, markets were pricing about a 50% chance of a rise by the end of the year. By 21 September, Commonwealth Bank said a September rise was about 90% priced, up from roughly 30% before the July inflation figures. Futures pricing reported by the ABC on 22 September also showed about a 90% chance for September and roughly even odds of a follow-up in November.

As at 24 September 2026, the four major banks agree on the next move, though not on what comes after it:

CBA said a second rise is not its base case but could come onto the table if September quarter trimmed mean inflation comes in at 1% or more. Westpac flagged that the August CPI is released the day after the decision (on 30 September, according to the ABS), which is one reason it had previously favoured November. NAB cited July inflation running hotter than the RBA expected. We could not find ANZ's own note, but according to The Nightly, ANZ's economists expect a rise in September on top of the one they already forecast for November, which would take the cash rate to its highest level since late 2008.

What lenders are doing to investor rates

Lenders passed on this year's rises in full. The RBA's F6 lending rates table shows the average variable rate on outstanding investor loans across all lenders at 6.5% in July 2026, the latest month published, up from 5.8% in January. New investor variable loans were written at an average of 6.4% in July. The RBA's August Statement noted that variable mortgage rates rose by nearly 0.75 percentage points between January and June, and that a few small lenders had since trimmed some advertised variable rates by 0.2 to 0.3 points to hold market share.

Fixed rates moved ahead of the Board in the week to 22 September. According to Canstar data reported by Australian Broker on 22 September, ten lenders lifted 266 owner-occupier and investor fixed rates by an average of 0.33 percentage points in a week, with Westpac taking some fixed rates above 7%. The ABC reported on 22 September that CBA had raised its two-year fixed rate by 0.48 points to 6.82% and other fixed terms by 0.15 to 0.3 points.

If you are weighing up fixing, those moves tell you lenders have already priced in at least one rise. Fixing now is a bet that rates go higher than the market expects, not a way to dodge a rise that is already in the price.

What higher interest rates mean for your cash flow

Say you hold a $600,000 investor loan, which is 80% of a $750,000 property. At Cotality's national gross yield of 3.79%, that property earns about $28,425 a year in rent, or roughly $547 a week and $2,369 a month, before any expenses.

On interest-only terms, the rise in the average investor rate from 5.8% in January to 6.5% in July has already added $350 a month, or $4,200 a year. Each further 0.25 point adds $125 a month interest-only, or about $99 to $100 a month on principal and interest. At 6.75%, interest alone would run about $1,006 a month above the gross rent, before council rates, insurance, strata, maintenance, management and land tax.

Cotality made the same point in its September report: yields would need to rise substantially before rent covers holding costs while rates stay this high. For properties you already held at 7:30pm AEST on 12 May 2026, that shortfall can still be deducted against your other income. For established properties bought from that time, it can be negatively geared only until 30 June 2027 under the new rules, according to the Budget tax explainer (more on that below). Check what you can claim in our guide to rental property tax deductions.

These figures are an illustration only. Your own position depends on your rate, loan structure, offset balance, tax rate and actual rent.

Rents and vacancies are tight, but loosening in the big cities

The national vacancy rate held at 1.3% in August 2026, according to SQM Research, with 41,039 vacant rentals nationally. That is around 3,300 more than a year earlier, and the rate is up from 1.2%. Cotality's separate vacancy measure rose to 1.9% in August, its highest since January 2025, though still well below its pre-COVID decade average of 3.3%.

View data · Source: SQM Research national vacancy series

Month	Vacancy rate
Sep 24	1.24
Oct 24	1.20
Nov 24	1.37
Dec 24	1.55
Jan 25	1.04
Feb 25	1.26
Mar 25	1.13
Apr 25	1.29
May 25	1.24
Jun 25	1.28
Jul 25	1.24
Aug 25	1.24
Sep 25	1.18
Oct 25	1.19
Nov 25	1.27
Dec 25	1.44
Jan 26	1.24
Feb 26	1.14
Mar 26	1.04
Apr 26	1.16
May 26	1.24
Jun 26	1.29
Jul 26	1.34
Aug 26	1.35

The national figure hides a two-speed market. Sydney has 26% more vacancies than a year ago and Canberra 29% more, while Brisbane, Perth, Adelaide and Darwin all have fewer.

Source: SQM Research, vacancy rates for August 2026 and combined advertised rents for the week ending 4 September 2026.

Asking rents have stalled. SQM found national combined advertised rents were flat over the 30 days to 4 September, at $701.53 a week nationally and $793.76 across the capitals. They are still 7.3% higher than a year earlier, but SQM expects that annual figure to fall as last spring's strong months drop out. Sydney house rents fell 1.2% in the month.

Other measures tell a similar story at different speeds. Cotality's rent index rose 0.4% in August (seasonally adjusted) and 5.7% over the year, adding about $38 to the national median weekly rent. The ABS measure of rents in the CPI, which tracks existing tenancies rather than new listings, rose 3.6% in the year to July. SQM expects the national vacancy rate to drift up towards 1.4% to 1.5% by December, and says spring will show whether the rental upswing in the larger capitals is over.

Values are falling and yields are at their highest since 2019

Cotality's national home value index fell 0.9% in August, the fifth monthly fall in a row, leaving values 3.6% below the March peak. National values are still 2.7% higher over the year, and the national median dwelling value is $912,885.

Every capital except Darwin fell over the three months to August, and 93% of capital city suburbs recorded a fall over winter. Sydney is down 7.1% from its February peak. Capital city listings were 24% higher than a year earlier in the four weeks to 30 August, and Cotality estimates quarterly sales are tracking 15.5% lower than a year ago.

With rents rising and values falling, yields are climbing. The national gross yield reached 3.79% in August, the highest since September 2019. Combined capital city yields were 3.6% and regional yields 4.3%, with Sydney the lowest capital at 3.3% and Darwin the highest at 6.3%.

The forecasts point to more weakness first. CommBank economists said on 1 September that they expect national prices to fall about 9% from peak to trough, around 13% in Sydney and 12% in Melbourne, before stabilising and recovering during 2027.

For landlords, rising yields are a partial offset. They improve income relative to value, but at 3.79% gross, most mortgaged investors are still paying more in interest than they collect in rent.

Investor lending and APRA's new limit

Investor borrowing has turned sharply. The ABS lending indicators show the value of new investor loan commitments fell 10.2% in the June quarter 2026 to $37.1 billion, seasonally adjusted, and the number of loans fell 8.6% to 52,599. Owner-occupier lending fell a more modest 1.9% by value. Investor lending is still 8.1% higher than a year earlier, which shows how strong it was in late 2025.

View data · Source: ABS Lending indicators, June quarter 2026

Quarter	Investor loans
Mar 23	22.3
Jun 23	23.1
Sep 23	24.5
Dec 23	26.5
Mar 24	28.1
Jun 24	31.7
Sep 24	33.5
Dec 24	32.4
Mar 25	32.8
Jun 25	34.3
Sep 25	39.9
Dec 25	42.7
Mar 26	41.3
Jun 26	37.1

The RBA's August Statement described a sharp decline in new housing loan commitments in recent months, driven by investors. It put that down to the softer established market, higher rates and the negative gearing and capital gains tax changes announced in the Budget.

On the prudential side, APRA's debt-to-income limit has applied since 1 February 2026. Banks can fund no more than 20% of their new investor loans, and separately 20% of new owner-occupier loans, at a debt-to-income ratio of six times or more. APRA said it acted because high debt-to-income borrowing had started to rise, driven by investors.

The limit is not biting across the system yet. APRA's June 2026 quarterly statistics show 8.9% of new investor loans were at six times income or more, well under the cap, while investors took 35.6% of new loans funded, up from 34.1% a year earlier. APRA reviewed its settings on 28 May 2026 and left them unchanged, including the 3 percentage point serviceability buffer, saying high debt-to-income lending remained well below its limits. We found no further macroprudential changes announced by APRA as at 24 September 2026. The cap matters most if you are highly leveraged and want to add to your portfolio, because an individual bank near its limit can ration those loans.

How the negative gearing and CGT changes fit in

The biggest policy change for investors this year came in the 2026-27 Budget on 12 May 2026. According to the ATO, from 1 July 2027 negative gearing for residential property will be limited to new builds, and the 50% CGT discount will be replaced with cost base indexation and a 30% minimum tax rate on capital gains. The ATO says these measures are now law.

Properties held at 7:30pm AEST on 12 May 2026 (including those under contract but not yet settled, according to Treasury) are exempt from the negative gearing change, and the CGT change applies only to gains that accrue after 1 July 2027. We cover the detail in negative gearing changes 2026 and CGT changes for landlords.

The RBA now names these changes as one of the reasons investor demand and prices have softened. Cotality's view is that investors are likely to put more weight on yield than they did before 12 May.

Victoria's rental reforms and what they mean for investors

We normally stay national. This section covers Victoria because it has gone furthest and fastest on rental reform, and because its effect on investors is contested: the Government says the changes give renters security, while landlord groups say they are driving investors out. Treat it as market news, and if you own in another state, check with your own state regulator.

What changed and when

The Victorian Government says it has delivered more than 150 renter reforms, including rental minimum standards and a cap of one rent increase every 12 months for most agreements that started on or after 19 June 2019. The latest round, under the Consumer and Planning Legislation Amendment (Housing Statement Reform) Act 2025, is being phased in:

• 25 November 2025: no-fault evictions banned, so a notice to vacate needs a valid reason even at the end of a fixed term, and a fixed term that ends rolls onto a periodic agreement. Sale, renovation and breaches such as unpaid rent remain valid reasons. Notice for rent increases and some notices to vacate rose from 60 to 90 days. All forms of rental bidding were banned, including accepting a higher offer than the advertised rent. Properties must meet minimum standards when advertised, and annual smoke alarm checks became mandatory for every rental.
• 1 December 2025: internal blind and curtain cords must be secured.
• 31 March 2026: a standard rental application form, limits on what applicants can be asked, and a ban on third-party fees for applications and rent payments.
• 1 July 2026: portable bonds, letting renters transfer a bond to their next rental.
• 13 October 2026: landlords must give notice and evidence before claiming a bond, keep records showing the property met minimum standards, and arrange gas and electrical safety checks every two years for all rentals. Application fees charged by landlords or agents are banned.
• From 1 March 2027: new minimum energy efficiency standards phase in. For example, efficient fixed cooling is required in the main living area at the start of a new agreement from 1 March 2027 and in every rental from 1 July 2030, and a failed fixed heater that cannot be repaired must be replaced with an energy-efficient fixed electric one.

Dates and details are from Consumer Affairs Victoria and Victorian Government releases.

Land tax and levies

Victoria has also raised the cost of holding an investment property. Under the COVID Debt Repayment Plan, from the 2024 land tax year the tax-free threshold for general land tax fell from $300,000 to $50,000 of total taxable site value. Holdings from $50,000 to under $100,000 now pay a flat $500, holdings from $100,000 to under $300,000 pay $975, and rates above $300,000 are 0.1 percentage points higher. The State Revenue Office says these changes are legislated to apply until 30 June 2033.

In practice, an investor whose only taxable holding had a site value of $500,000 paid $775 under the 2022 to 2023 rates and pays $1,950 under the current rates. A holding with a $250,000 site value went from nil to $975. Since 1 January 2025, a 7.5% short stay levy has also applied to stays of under 28 days, with the revenue going to social and affordable housing.

The government's case

The Victorian Government argues that more Victorians are renting than ever and need security. It says the reforms give renters more time to budget or move, ban rental bidding, lift safety and energy standards, and cut costs such as paying a second bond while waiting for the first to be refunded. Consumer Affairs Victoria presents the changes as balancing the relationship, giving landlords clearer obligations and processes as well as giving renters stronger protections. The land tax changes are part of a plan to repay COVID-era debt, and short stay levy revenue funds social and affordable housing.

The criticism from landlord groups

The Real Estate Institute of Victoria (REIV) has supported some changes, including annual smoke alarm checks and standards at the point of advertising. But it argues that the cumulative weight of regulation and tax is pushing investors out. In a December 2024 member survey, 75% of respondents named the end of no-reason notices to vacate as among the most impactful changes, 74% named the energy standards, and 45% the longer notice periods.

In its 2026 to 2027 state budget submission, the REIV called for a freeze on new or higher property taxes and land tax concessions for longer leases. CEO Toby Balazs said industry feedback now ranks Victoria as "the least accommodating state for property investors". The REIV also says land tax on a median-priced house or unit is now twice what it was in 2020.

What the data shows

The clearest evidence is rental bond data from Homes Victoria, which uses active bonds as a count of private rental dwellings.

Source: Homes Victoria Rental Report, September quarter 2025 data tables, current figures.

On current figures, Victoria had about 23,000 fewer bonded rentals in September 2025 than at the June 2023 peak, a fall of 3.4%. The decline was steepest through 2024 and has slowed since, with the September 2025 count 1.0% lower than a year earlier. New lettings in the September 2025 quarter were 2.3% lower than a year earlier. Bond counts are revised as late lodgements arrive, so early reports of the 2024 fall were larger than the current series shows. The September 2025 report is the latest published as at 24 September 2026.

Bonds are not a perfect measure of investors selling. A property sold to an owner-occupier leaves the rental pool, but one sold to another investor does not. Still, a shrinking rental count is consistent with the REIV's argument. On the other side, rents have not surged: SQM's Melbourne vacancy rate was 1.8% in August, the second highest of the capitals after Canberra, and Melbourne asking rents rose 6.1% over the year, close to the national pace. Melbourne values are also 6.8% below their March 2022 peak, according to Cotality, so some investors may be holding off selling into a falling market rather than rushing out.

Both sides have a point. The reforms add real compliance costs and reduce landlords' flexibility, and the rental pool has shrunk. But the evidence so far does not show the collapse in supply or surge in rents that some warnings predicted. Victorians vote at a state election on 28 November 2026, according to the Victorian Electoral Commission, and the Government says the Liberal Opposition opposed its rental reforms, so expect the rules and the tax settings to be debated during the campaign.

Other states are heading the same way

Victoria is ahead, not alone. Other states and territories are working through their own changes in many of the same areas, from evictions and rent increases to bidding and minimum standards. Our guide to rental reforms across Australia tracks what has changed where.

Dates to watch

• 29 September: RBA decision, at the end of the 28 to 29 September meeting.
• 30 September: ABS monthly CPI for August.
• Early October: Cotality's home value index for September.
• 13 October: Victoria's next rental law changes take effect.
• 28 October: ABS CPI for September, including the full September quarter trimmed mean that CBA says could trigger a second rise.
• 2 to 3 November: next RBA meeting.
• 11 November: ABS lending indicators for the September quarter.

What this means for landlords

1. Stress-test your repayments at 6.75% and 7.0%. On a $600,000 interest-only loan, that is $3,375 and $3,500 a month. If either figure breaks your budget, talk to your lender or broker now, not after the letter arrives.
2. Do not fix out of fear. In the week to 22 September, ten lenders lifted fixed rates by an average of 0.33 points ahead of the Board, according to Canstar data. Compare the fixed rate with where the major banks expect variable rates to be over the same term, and remember that CBA and Westpac both pencil in cuts from August 2027.
3. Price renewals to the local market, not the national headline. Asking rents are flat nationally and falling in parts of Sydney and Canberra. Where vacancy rates are 1.7% to 2.1%, a modest increase that keeps a good tenant usually beats weeks of vacancy.
4. Keep your cash buffer in an offset account. The RBA's August Statement notes that many borrowers have sizeable buffers. If you have one, it is your cheapest protection against another rise or a vacant month.
5. Check how the 2026 negative gearing rules apply to each property. Anything you held at 7:30pm AEST on 12 May 2026 keeps negative gearing until you sell. Established properties bought from that time lose it from 1 July 2027, which changes the maths on selling or buying.
6. If you own in Victoria, prepare for 13 October. Book gas and electrical safety checks, gather evidence that the property meets minimum standards, and keep photo records for any bond claim. Start budgeting for cooling and heating upgrades under the 2027 energy standards.
7. Keep good records of every holding cost. Higher interest, safety checks and compliance work are generally deductible for a rental property. Our guide to rental property tax deductions covers what you can claim.