September 2026 Property Market Update: Rates to rise again. What borrowers should know.
What another rate rise means for borrowers and buyers
Author: Peter Vassilis
Reading time: ~5 minutes
Key takeaways
One more 0.25 per cent increase is widely expected on 29 September.
ANZ and Judo expect another rise in November.
National home values are 3.6 per cent below their March peak. Sydney is down 7.1 per cent from February.
Buyers have more negotiating power, but borrowing capacity will be lower.
Falling prices do not solve our supply issue or help more people get into homes.
Another rate rise, or two
The cash rate is 4.35 per cent after three increases this year. All four major banks expect the RBA to lift it by another 0.25 percentage points at its 29 September meeting.
Forecasters differ on what happens after that. ANZ and Judo expect another increase in November. AMP also expects the September increase, but views a second rise as a high risk rather than its base case because unemployment, economic growth and property prices are already weakening.
Underlying inflation was 3.6 per cent in July, above the RBA's 2 to 3 per cent target. Household spending has also remained stronger than expected, while fuel, electricity and construction costs are adding pressure.
Large data-centre and infrastructure projects are increasing demand for construction workers, materials and electricity.
Household budgets are also being squeezed, leaving borrowers with less room in their monthly budget.
What this means for existing borrowers
Rate hikes will hurt, especially when we're already paying as much as we are at the petrol station, the grocery store, or to our tradies. The increases below are based on a 30-year home loan, with principal and interest repayments. Your actual change will depend on your balance, rate, remaining term, and repayment type.
You should allow for at least one more increase in your household budget. It is also sensible to test two, even if the second does not occur.
This is a good time to review your current rate, fees, offset or redraw arrangements, repayment type and cash buffer. A review does not automatically mean refinancing or fixing. Your existing lender may be able to improve the rate, and switching can involve costs or the loss of useful features. We will continue to review & negotiate for all our existing clients every 6 months, as we've always done.
Property prices are already falling
National dwelling values fell 3.1 per cent over the three months to August (above), according to Cotality, with Sydney being 7.1 per cent below where it was in February (below).
The market is not moving evenly. Scarce, well-presented homes in tightly held areas can still attract strong competition. Lower-priced areas may also receive support from first home buyer incentives.
Further falls are possible, and CommBank forecasts a national peak-to-trough decline of around 9 per cent, including around 13 per cent in Sydney.
AMP expects a national decline of around 10 per cent by the June quarter of 2027.
These are forecasts, not guarantees, and conditions will vary by suburb and property type.
Falling prices do not solve the supply problem
Higher rates and the Budget tax changes can reduce demand and prices. They do not add completed homes to the market.
HIA estimates Australia needed more than 250,000 new homes last year, but only 196,000 were commenced.
New supply will become harder to deliver during a downturn. Finance, labour, materials and energy remain expensive. Weaker buyer demand can reduce the presales that developers need before construction begins. Recent AFR reporting highlighted a warning from a major developer that this combination is putting future projects at risk.
This is why established property prices can fall while the longer-term housing shortage remains. The downturn may reduce demand now without fixing the number of homes available later. With the population still growing, and if history is to repeat itself, we still see this as a property market dip, not a crash. We showed the data from previous downturns in our June 2026 update.
What you should do now
Existing borrowers (we will continue to review & negotiate for all our existing clients every 6 months, as we've always done)
budget for at least one more rate increase
consider tapping into equity (if needed for your goals), given the valuation today is likely to be higher than what it could be next year
consider extending your loan term to reduce your contractual repayments
compare your current rate with the pricing available to new customers
check whether your offset, redraw and repayment structure still suit you
keep an appropriate cash buffer where possible
ask for help early, if repayments are becoming difficult
Buyers
make sure of your borrowing capacity before negotiating or making an offer, with your broker
set a comfortable limit rather than relying on the maximum approval amount (just because the bank allows you to proceed to that loan amount, doesn’t mean that you should)
allow for higher repayments and a longer holding period
use the extra choice and negotiating time without trying to pick the exact bottom
budget to have more cash leftover after a purchase
Owners and sellers
use many recent comparable sales to determine the sale price, not just 1 or 2; try and obtain 5 or more if possible
if buying and selling, model both transactions and focus on the changeover gap with your broker
if holding for the long term, keep short-term price movements in the context of cash flow and your reason for owning the property
Final thoughts
Another rate rise looks likely. A second is possible. Property prices may fall further, and borrowing capacity may reduce again. For existing borrowers, preparation matters more than predicting the exact number of increases. For buyers, the opportunity is more choice and less urgency, but potentially less finance. For property owners, the right response depends on cash flow, timing and the reason the property is being held. There’s enough information at our fingertips to be able to make strategic decisions, even when the outlook is uncertain.
If you would like us to review your loan, borrowing capacity or buying plan, hit the Start Today button below.
The best opportunity depends on your own numbers, your own circumstances, and what is in your best interest and remember, we need to be able to sleep well at night before committing to any strategy.
General information only. This article does not consider your objectives, financial situation or needs. Property, lending, tax and social security outcomes depend on individual circumstances. Seek appropriate advice before acting.
Frequently asked questions
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One further rise is widely expected on 29 September. ANZ and Judo expect another in November. CBA, NAB, Westpac and AMP do not currently have a second rise as their central forecast. The outlook may change with inflation, spending and employment.
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On a $600,000 loan, one quarter-point rise adds about $97 a month in a simple 30-year illustration.
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In a simplified 30-year repayment illustration using APRA's minimum buffer, $600,000 of capacity at a 9.00 per cent assessment rate reduces to about $587,000 at 9.25 per cent and $574,000 at 9.50 per cent. Every lender assesses income, expenses, debts and risk differently.
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Cotality's index shows Sydney dwelling values were 7.1 per cent below their February 2026 peak at the end of August. Houses, units, suburbs and price ranges are moving at different speeds.
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No. A downturn can reduce demand and prices, but it does not add homes. Higher finance and construction costs may also make future projects harder to deliver.
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Not automatically. Compare fixed and variable pricing, break costs, offset access and your need for certainty before deciding. The right structure depends on your circumstances.