October property market report
Here’s your property market wrap on the results from October 2026. We’ll cover home prices, rents, the strongest performing regions, current auction conditions, and the economic and housing policy developments influencing the market as we approach the end of the year.
October marked the seventh consecutive monthly decline in Australian home values. Cotality’s national Home Value Index fell 1.2% during the month, taking the annual decline to 2.8%. National dwelling values are now 6.7% below their March 2026 peak, representing an approximate $63,400 reduction in the median Australian dwelling value.
The downturn continues to be most pronounced across the capital cities, where values declined 1.4% in October and 4.5% over the quarter. Regional markets remain more resilient, although the combined regional index also fell 0.7% during the month and 2.0% over the quarter. Higher borrowing costs, reduced purchasing capacity and weaker consumer confidence continue to influence buyer behaviour.
October Median Home Prices
Changes From Last Month
Metrol Melb | Regional | |
|---|---|---|
All Dwellings (AD) | -0.8% | -0.6% |
Houses | -1.0% | -0.3% |
Units | -0.3% | -0.8% |
Annual change AD | -7.6% | +2.1% |
Median of Houses | $906,067 | $658,414 |
Median of Units | $620,996 | $461,665 |
Median of AD | $773,027 | $627,370 |
Metropolitan Melbourne
Melbourne dwelling values declined 0.8% during October, taking the quarterly fall to 2.7%. Values are now 7.6% lower than a year ago, with the median dwelling value falling to $773,027.
Melbourne values are now 8.2% below their March 2022 record peak. The result reflects the continued impact of higher interest rates, reduced borrowing capacity and weaker buyer confidence, with the traditional spring selling season failing to deliver a recovery in demand.
Melbourne also remains relatively affordable compared with several other capital cities. Its median dwelling value of $773,027 is below Brisbane at $1,018,401, Perth at $942,018, Adelaide at $916,860, Canberra at $844,400 and Sydney at $1,178,959. Interestingly, Melbourne dwelling values are now 7.3% lower than they were five years ago.
Regional Victoria
Regional Victoria continues to outperform metropolitan Melbourne on an annual basis, although values also weakened during October.
Dwelling values declined 0.6% for the month and 1.5% over the quarter, leaving the market 2.3% below its May 2026 peak. Despite the recent downturn, regional Victorian values remain 2.1% higher than a year ago, with a median dwelling value of $627,370.
The difference between metropolitan Melbourne and regional Victoria remains considerable. While Melbourne dwelling values have fallen 7.6% over the past year, regional Victoria has recorded growth of 2.1%, a difference of 9.7 percentage points. Regional Victoria has also recorded growth of 8.1% over the past five years, compared with Melbourne’s 7.3% decline.
Changes in Rental Prices Over 12 Months
Melb | |
|---|---|
Metro Melb Houses | +4.4% |
Metro Melb Units | +4.6% |
Current Rental Yields
Metro Melb | Regional Vic | |
|---|---|---|
All Dwellings | 4.1% | 4.3% |
Houses | 3.6% | 4.3% |
Units | 5.2% | 4.9% |
Rental market
Australia’s rental market continues to ease, with vacancy rates rising and rental growth slowing across most capital cities.
The national rental vacancy rate increased to 2.3% in October, up from 2.2% in September and its highest level since January 2022. While rental availability has improved, vacancy rates remain below the decade average of 3.3%, indicating that rental conditions are still relatively tight.
Melbourne house rents increased 4.4% over the past year, while unit rents rose 4.6%. Regional Victoria continues to offer slightly stronger rental returns, with a gross dwelling rental yield of 4.3%, compared with Melbourne’s 4.1%. With rents continuing to rise while property values decline, gross rental yields are improving, although higher interest rates, land tax, insurance and maintenance costs continue to place pressure on investors.
Around the Grounds
Melbourne’s strongest performing markets have also moved into negative annual growth, highlighting how widespread the current property downturn has become. Unlike September, when two of Melbourne’s five strongest SA3 markets recorded positive annual growth, all five recorded declines in October.
Metropolitan Melbourne’s strongest markets
Rank | SA3 market | Median dwelling value | Annual change |
1 | Melbourne City | $503,514 | -0.3% |
2 | Sunbury | $721,520 | -0.7% |
3 | Maribyrnong | $593,486 | -1.0% |
4 | Macedon Ranges | $912,977 | -2.0% |
5 | Brimbank | $701,646 | -2.1% |
Regional Victoria continues to present a different picture, with several regional markets recording annual growth well above the Victorian average. Although growth has slowed compared with September, more affordable regional centres continue to demonstrate greater resilience than metropolitan Melbourne.
Regional Victoria’s strongest SA3 markets
Rank | SA3 market | Median dwelling value | Annual change |
1 | Glenelg - Southern Grampians | $456,959 | +7.9% |
2 | Latrobe Valley | $502,004 | +7.6% |
3 | Grampians | $395,158 | +7.5% |
4 | Loddon - Elmore | $399,726 | +6.0% |
5 | Campaspe | $529,384 | +5.8% |
Spring selling: How the market is responding
October's results highlight a changing spring property market. Cotality reports that new listings are tracking almost 18% below the five-year average, while total advertised stock continues to accumulate.
Australian home sales over the past three months were approximately 23% lower than a year ago, with capital city properties now taking 39 days to sell, compared with 23 days last year.
Auction conditions also reflect this shift, with capital city clearance rates averaging 45.2% during October. While spring continues to bring properties to market, buyers are taking a more considered approach to their purchasing decisions.
Housing policy, economics, interest rates and confidence
Interest rates and inflation remain two of the biggest influences on Australia’s property market. The Reserve Bank’s official cash rate is currently 4.60%, its highest level in 15 years, with another interest rate decision scheduled for 3 November. Annual inflation reached 4.3% in September, increasing expectations that the RBA may need to raise rates again.
Higher borrowing costs are significantly affecting household purchasing power. Cotality estimates that average borrowing capacity has fallen approximately 11.5%, or more than $105,000, since the beginning of the interest rate tightening cycle. With unemployment also rising to 4.7% in September, consumer confidence and household budgets are expected to remain under pressure.
With Victoria’s state election scheduled for 28 November, housing affordability and property taxes are also becoming increasingly important. The Liberal and National Coalition has committed to progressively restoring the land tax-free threshold from $50,000 to $300,000 over five years, removing stamp duty for eligible first home buyers purchasing properties up to $1 million, and abolishing the Emergency Services Tax on the family home.
If implemented, these changes could ease holding costs for investors and homeowners, while encouraging greater first home buyer activity. However, increasing housing demand without addressing the underlying shortage of new homes could also create further pressure on property prices.
Looking ahead, Australia’s ongoing housing supply shortage remains an important longer-term consideration. Construction costs, development constraints and slower building activity continue to restrict the supply of new homes. While this may provide support for property values over time, higher interest rates and weaker buyer confidence are likely to remain significant factors as we move towards the end of 2026.
Remember, the information provided is of a general nature only. You should always seek independent legal, financial, taxation or other advice based on your own circumstances.
Free Sales Price Report:
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