House sale volumes have fallen by nearly 20 percent over three months, despite a big increase in homes listed for sale.
The Savill’s October residential market report cited Cotality research showing home sales were 19.1 percent down in the three months to September and 13.3 percent below the five-year average.
At the same time SQM Research had noted total home sale listings nationally were now 21.6 percent higher than a year ago.
“Much of this increase reflects properties remaining on the market for between one and six months, while the median selling period has lengthened from 23 to 39 days,” The Savills report said.
“The Reserve Bank’s latest increase in the cash rate to 4.60 percent last week adds further pressure to a housing market already losing momentum.
“Higher mortgage rates will reduce borrowing capacity for prospective buyers and lift repayments for existing borrowers, reinforcing the affordability and confidence constraints that have steadily weakened demand through 2026.”
Cotality’s national Home Value Index fell 1.1 percent in September, its sixth consecutive monthly decline, leaving values 5.2 percent below their March peak.
Sydney fell 1.4 percent over the month and Brisbane recorded the sharpest capital-city fall at 1.5 percent following a standout run of house price growth.
“The upper end of the market is undergoing a sharper adjustment across most capital cities,” the report said.
“Sydney’s upper-quartile house values led the correction, falling a further 5.6 percent in Q3 2026 and taking the annual decline into double-digit territory at 10.8 percent.
“Highly leveraged homeowners who bought below the $5 million mark during the upswing of recent years are likely to be feeling the greatest pressure.”
Despite this, Savills says widespread forced selling is unlikely.
“Some borrowers are shifting to interest-only repayments, while lenders have generally been willing to work with customers experiencing mortgage stress,” it said.
“Combined with the absence of a significant increase in housing supply, this may help limit the extent of further price declines.”
For renters, the near-term picture is “mixed”.
“The national vacancy rate rose to 2.0 percent in September from a record low of 1.5 percent in February, according to Cotality,” the report said.
“Monthly rental growth eased to 0.3 percent. However, vacancy remains well below the pre-pandemic decade average of 3.3 percent, and rents are still 5.5 percent higher than a year ago.”
Savills said, if higher rates further deter investors, a modest easing in rents may be temporary.
