Australian home values fell 1.1% in September as the RBA lifted rates again
Cotality's index fell 1.1% in September as the RBA lifted the cash rate to 4.60%. What a 0.25 point rise and a lower valuation do to a loan.
Australian home values fell 1.1% in September, the sixth monthly fall in a row, according to Cotality's Home Value Index published on 1 October 2026. Two days earlier, on 29 September, the Reserve Bank of Australia (RBA) raised the cash rate target by 25 basis points to 4.60%.
How far values have moved
Over the September quarter the national index is down 3.7%, leaving it flat (0.0%) on a year earlier. Cotality puts the national median value at AUD 899,236.
The capitals are doing most of the falling. Combined capital city values dropped 1.2% in the month and 4.3% over the quarter, while regional values fell 0.7% in September but are still 5.6% higher than a year ago. Brisbane (down 1.5%) and Sydney (down 1.4%) led the decline. Darwin was the only capital to rise, by 0.4%.
The rate rise behind it
The Governor told the 29 September media conference that the Board had raised rates three times earlier in 2026, which makes September the fourth increase this year. Cotality's report says higher mortgage rates "will reduce borrowing capacity", and activity has already slowed: sales over the past three months were 19.1% lower than a year earlier, and capital city homes took a median 39 days to sell, against 23 days a year ago.
The next RBA decision is due on 3 November 2026.
What a 0.25 point rise does to a loan
A rate rise is felt twice. Once in the repayment, and again in the rate a new loan is assessed at. APRA's System Risk Outlook of 21 May 2026 says it has set the mortgage serviceability buffer at 3 percentage points above the loan interest rate since 2021.
Stresst's Australia Affordability calculator shows both at once. Take an AUD 600,000 loan over 30 years at an illustrative 6.00%. If that rate rose by the full 0.25 points to 6.25%, the monthly repayment goes from AUD 3,597 to AUD 3,694. At the buffered rate, 9.00% rising to 9.25%, the assessed repayment goes from AUD 4,828 to AUD 4,936.
Add net monthly income and existing commitments and the calculator also estimates a maximum loan at that stressed rate. On the same income and commitments, the maximum falls by about 2.2% after a 0.25 point rise.
What a lower valuation does to a refinance
For someone refinancing, falling values push up the loan to value ratio (LVR).
Take an AUD 624,000 loan on a home valued at AUD 800,000, an LVR of 78%. A 3.7% fall in value, in line with the national quarterly drop, takes the home to AUD 770,400 and the LVR to 81.0%. An index is an average, so any one valuation can move more or less than that.
Stresst's LMI Estimator works this out from the property value and loan amount. Where the LVR is above 80% it estimates the lenders mortgage insurance premium, including the stamp duty charged on it, and shows the new balance and LVR if the premium is added to the loan.
On the buying side, the Stamp Duty Calculator covers all eight states and territories, with first home buyer concessions and foreign buyer surcharges built in, so a lower price can be run straight through to the duty payable.
Run your own numbers in Stresst
Every figure in this article came out of the Stresst app, and you can run the same calculations on your own loan in a couple of minutes.
The Australia Affordability calculator, LMI Estimator and Stamp Duty Calculator are all free, as is the Mortgage Payment calculator, which works in AUD. Premium adds PDF export and the investor tools (negative gearing, depreciation and capital gains tax), with a 7-day free trial.
Download it now and have your numbers ready before the RBA's November decision.
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Sources
- Cotality, Home Value Index, October 2026 report (September data), 1 October 2026. https://discover.cotality.com/hubfs/Article-Reports/COTALITY%20HVI%20OCT%202026%20FINAL.pdf
- Reserve Bank of Australia, Media Conference: Monetary Policy Decision, 29 September 2026. https://www.rba.gov.au/speeches/2026/mc-gov-2026-09-29.html
- Reserve Bank of Australia, Cash rate target, checked 3 October 2026. https://www.rba.gov.au/cash-rate-target-overview.html
- Australian Prudential Regulation Authority, System Risk Outlook, 21 May 2026. https://apra.gov.au/system-risk-outlook-may-2026
This article is general information only and is not financial, tax or legal advice.