Cotality found home values fell across 93% of capital city suburbs over winter, more than double from the 45.8% in autumn.
National Home Value Index (HVI) fell for a fifth straight month in August, down 0.9%, taking home prices across Australia 3.6% below their March peak.
Cotality research director Tim Lawless said the downturn was no longer confined to select markets or premium segments as it was in the previous months.
"What started as a more concentrated easing across higher-value segments has now become a much more generalised softening, with the vast majority of capital city suburbs recording some level of decline," Mr Lawless said.
Buyer’s market gains momentum
The report revealed as demand softens, homes are taking longer to sell, auction clearance rates have remained below 50%, and advertised stock levels have climbed.
Capital city listings were 24% higher than a year ago at the end of August, and 8% above the five-year average, despite new listings being lower than a year earlier.
Per Cotality, weaker demand is also evident in transaction activity.
National quarterly home sales were estimated to be 15.5% lower than a year ago and 11.5% below the five-year average.
Brisbane, Perth and Sydney recorded the steepest decline in sales volumes, each down more than 20% from a year earlier.
Mr Lawless said the growing imbalance between supply and demand was giving buyers greater leverage.
"Higher advertised stock levels are simply a factor of a slower rate of absorption," he said.
"Longer selling times, larger vendor discounting and persistently low auction clearance rates all point to a buyer’s market."
Despite this, Mr Lawless said, buyers were "lacking" the confidence to transact at the moment.
Sydney correction opens a window for investors
Falling prices in Sydney, Melbourne and Canberra could be opening a window for investors looking to enter premium markets at a discount.
Sydney continues to lead the correction, with dwelling values down 1.4% in August and sitting 7.1% below their February peak.
According to Cotality, the rate of decline in Sydney home values is now outpacing the earlier 2022-23 correction, when home values were down 6.6% over the equivalent period.
"The combination of a sharp drop in demand and higher than average advertised stock levels is weighing more heavily on Australia’s largest housing market," Mr Lawless noted.
Melbourne, Canberra (both down 1.1%) and Brisbane (down 1.0%) also recorded declines of at least 1% over the month.
Mid-sized capitals and previously hot markets, Adelaide and Perth each fell 0.8%.
Darwin was the only capital city to post monthly growth, rising 0.6% and reaching a new peak.
Rising rents boost rental yields despite price falls
Cotality’s national rental index rose 0.4% in August, while rents are up 5.7% (or an additional $38 per week) than a year ago.
"Over the past five years, rents have surged 39%, leaving renters paying around $200 more per week than they were in 2021," Mr Lawless said.
The national vacancy rate edged higher to 1.9%, its highest level since January 2025 but still tight by historical standards.
"The latest result continues a period of exceptionally low rental availability, with vacancy rates mostly holding below 2% nationally since early 2022," Mr Lawless added.
With rents rising and home values falling, gross rental yields were noted to have continued trending higher.
National gross rental yields reached 3.79% in August, the highest level since September 2019, according to Cotality.
Mr Lawless said investors could become increasingly focused on rental income following recent changes to property taxation policies announced in the federal budget.
"[I]nvestors are likely to place a greater emphasis on higher-yielding opportunities than they did before 12 May," he said.
However, the Cotality research chief added that yields would need to "rise substantially" before rental income offsets holding costs, particularly while interest rates remain elevated.
What could happen to home prices this spring?
Cotality warned the outlook for housing remains challenging, citing demand-side headwinds becoming "more entrenched" as the market moves into the spring.
Sticky inflation has increased expectations that the RBA could raise interest rates again later this year, in September or November as per economists.
Weak consumer sentiment, real wages declining and population growth stabilising all suggest demand is likely to remain subdued through spring.
"The risk profile for housing has shifted more firmly to the downside," Mr Lawless said.
"Spring normally brings a seasonal lift in the flow of homes coming onto the market, but the increase in new listings is unlikely to be as strong as usual this year."
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