Home buyer sentiment collapses as downturn hits new milestone

Home buyer sentiment in Australia has plummeted as the country's housing market reaches a new low, according to Cotality’s daily dwelling index. The index has fallen by 5% from its April 2026 peak, marking the largest decline in values across five major capital cities in 40 years. The peak-to-trough decline at the 5-city aggregate level is currently at 3.9%, suggesting the record could be broken by the end of 2026.

The number of homes for sale has surged, particularly in mid-sized capital markets. Listings increased by 24.4% overall, with notable surges in Brisbane (53.3%), Adelaide (41.0%), and Perth (53.3%). The median time to sell homes has also lengthened across these major cities. The Reserve Bank is expected to raise interest rates again, exacerbating the sour sentiment around house prices.

A recent Westpac-Melbourne Institute Consumer Sentiment Survey found that nearly two-thirds of consumers anticipate mortgage rates will rise. Consequently, dwelling price expectations have plummeted, with the index dropping around 36% over the past six months. Australians' perception of real estate as a secure savings vehicle remains at a historic low in September.

The combination of these factors suggests Australia's housing market may be on the brink of the largest correction in living memory. Australians may not be pessimistic enough about the situation.