Market Intelligence
Prices Falling but Rents Still Rising? What the November Supply Data Means for Your Next Build
National dwelling values have now fallen for seven consecutive months, yet advertised rents are still higher than they were a year ago. For an investor weighing the next acquisition, that split is confusing. Falling prices suggest weak demand, while rising rents suggest there are still not enough homes. This deep dive separates the two signals using the latest data from the Reserve Bank, the ABS, Cotality and SQM Research, and translates them into what they mean for a new build purchased in 2027. The short version: the price cycle is being driven by borrowing costs and tax changes, while the rental market is being driven by a supply pipeline that remains below the national target.
Rates Context: Why Prices Are Falling
On 3 November 2026 the RBA lifted the cash rate by 25 basis points to 4.85%, its latest increase in a tightening cycle that has run through 2026 (RBA Media Release, 3 November 2026). The RBA’s November 2026 Statement on Monetary Policy is the clearest guide to how long that pressure lasts:
Headline CPI inflation was 3.9% over the year to the September quarter, with trimmed mean inflation at 3.7% (RBA).
The RBA forecasts headline inflation of 4.5% by December 2026 and expects both measures to stay above 3% until the end of 2027 (RBA).
The cash rate assumption path, based on market pricing at 28 October, averages 4.9% in 2026/27 and 4.8% through 2027 and 2028. In other words, markets are not pricing a quick return to cheaper money (RBA).
The RBA notes that housing prices in September were almost 5% below their March peak and attributes the decline to higher interest rates and the federal Budget tax changes (RBA).
The takeaway for investors is that the price correction has an identifiable cause. It is a borrowing cost and policy story, not evidence that Australia suddenly has too many homes.
Data Dashboard: The Numbers Side by Side
Cotality’s Home Value Index for October 2026 (released 2 November 2026) shows national dwelling values fell 1.2% in the month, the seventh straight monthly decline. The national index is now 6.7% below its March peak, roughly $63,400 off the median dwelling value. Cotality describes the speed of the decline as the fastest in forty years.
At the same time, the transaction data shows a market where buyers have stepped back rather than one where stock is flooding in:
Sales over the past three months were 23% lower than a year earlier and 18% below the five-year average (Cotality).
Median time on market has stretched to 39 days and vendor discounting has widened to 4.7%, the largest since May 2019 (Cotality).
Fresh listings are about 18% below average, even though total capital city listings are elevated for this time of year (Cotality).
Now set that against the rental data:
SQM Research’s national vacancy rate was 1.4% in September 2026, up from a cycle low of 1.0% in March but still historically tight (SQM Research, released 13 October 2026).
National advertised asking rents were up 7.6% over twelve months, with houses up 8.4% and units up 6.3% (SQM Research).
Cotality’s national gross rental yield reached 3.85% in September, the highest since August 2019, while its own vacancy measure rose to 2.0%, still below the pre-COVID decade average of 3.3% (Cotality Monthly Housing Chart Pack, 15 October 2026).
The two vacancy figures differ because SQM and Cotality measure them differently, but both point in the same direction: rental conditions have eased slightly from extreme tightness, not swung into oversupply. Prices are adjusting to the cost of debt. Rents are still responding to a shortage of dwellings.
The Supply Pipeline: Approvals Still Short of Target
The ABS Building Approvals release for September 2026 (released 2 November 2026) shows total dwelling approvals rose 5.1% to 17,948 in seasonally adjusted terms. Annualised, that is roughly 215,000 dwellings, our calculation from the ABS monthly figure. The National Housing Accord target of 1.2 million homes over five years implies around 240,000 a year, so the current run rate remains short of what policy settings assume the country needs.
The composition matters more than the total:
Private sector house approvals fell 5.3% to 10,432 in September, but are 9.6% higher than a year earlier, and September was the ninth consecutive month above 10,000 (ABS).
Private sector dwellings excluding houses rose 16.6% to 6,579 in the month, yet remain 20.5% lower than September 2025 (ABS).
Townhouse approvals were 2,792 in original terms, 2.5% below their twelve-month average (ABS).
The value of new residential building approved fell 3.3% to $9.74 billion (ABS).
This is the structural point that a falling price index hides. Detached house approvals have held up because land and build projects in growth corridors can still be financed. Apartment and higher-density approvals remain well below last year’s level because those projects need presales, and presales are hard to secure when investor demand for established and off-the-plan stock has pulled back. Fewer approvals today means fewer completions in 2027 and 2028, which is when a home bought on titled land now would be entering the rental market.
Construction pricing should be verified with a vetted independent builder at the time of contract.
Corridor Analysis: Where Supply and Rent Pressure Diverge
National averages blur very different state conditions. Combining the ABS state approvals with SQM’s capital city vacancy and rent data gives a clearer picture of where the rental gap is widest.
Victoria approved 2,895 private sector houses in September, the most of any state, and 3,694 total dwellings (ABS). Melbourne’s vacancy rate sits at 1.9%, up from 1.8% a year earlier, and asking rents are up 5.7% over twelve months (SQM Research). Cotality reports Melbourne dwelling values fell 3.4% over the September quarter and remain 7.3% below their level five years ago. For a Melbourne growth corridor buyer, that combination means entry prices sit below where they were five years ago while rents are still growing, although the higher volume of house approvals means lot selection and estate staging matter more here than in smaller capitals.
Queensland approved 4,382 total dwellings and 2,407 private houses (ABS). Brisbane’s vacancy is 0.9% and asking rents are up 7.2% (SQM Research), even though Brisbane recorded the fastest monthly value decline of any capital at 2.0% in October (Cotality).
Western Australia and South Australia show the tightest rental conditions in the country. Perth and Adelaide both have vacancy of 0.6%, with rents up 5.0% and 4.5% respectively (SQM Research). WA approved 1,832 private houses and SA 955 (ABS). Cotality notes that virtually every suburb across Brisbane, Perth and Adelaide has recorded a drop in values over the past three months.
New South Wales is the outlier on vacancy. Sydney’s rate has risen to 1.8% from 1.3% a year earlier, a 39% increase in vacant listings, and unit asking rents fell 1.0% over 30 days (SQM Research). NSW also recorded the largest jump in apartment approvals, to 1,995 in original terms (ABS).
Key corridor takeaways:
The tightest rental markets (Perth, Adelaide, Brisbane) are also the markets where values are falling fastest, which is improving the yield on entry for new house and land.
Melbourne offers the deepest price reset relative to five years ago of the capitals Cotality cites, with moderate vacancy and steady house approvals.
Sydney’s softening is concentrated in units, consistent with the broader evidence that higher-density stock carries more vacancy risk in this cycle.
Borrowing Impact: What 4.85% Does to Your Next Purchase
The cash rate has been lifted repeatedly through 2026, and Cotality states that affordability and serviceability constraints were the earliest factors weighing on housing demand. The labour market is now adding a second constraint. The ABS Labour Force release for September 2026 (released 15 October 2026) shows unemployment rose to 4.7%, with employment down 39,000 in the month, and the RBA forecasts unemployment to reach 4.8% by June 2027 and a bit over 5% by the end of 2028.
For investors, the practical implications are:
Serviceability buffers are now being applied to materially higher base rates, so borrowing capacity is lower than it was at the start of 2026. Model repayments at your lender’s current assessment rate, not the advertised rate.
A staged land and build contract spreads drawdowns over the construction period, so interest during the build is charged on the progress payments drawn rather than the full contract price from day one. Your broker and accountant should confirm how this applies to your loan structure.
Rising unemployment is a tenant risk as much as a borrower risk. Build a vacancy allowance of several weeks into your cashflow model rather than assuming the current tight vacancy rates persist through completion.
Taxation, lending and structural finance rules are complex and depend on your personal circumstances. Before acting on any of this analysis, verify your position with a Certified Practising Accountant (CPA) and a licensed financial adviser or mortgage broker.
Policy Implications: The Budget Changes Are Shaping Supply
The RBA explicitly attributes part of the price decline to the federal Budget tax changes. Treasury has confirmed that from 1 July 2027 negative gearing of residential property will be limited to new builds, with properties held before 7:30pm AEST on 12 May 2026 exempt, and that the 50 per cent CGT discount will be replaced by an inflation-based discount with a minimum tax rate on capital gains.
Read alongside the approvals data, these rules create a clear incentive structure:
Investor demand is being redirected away from established housing and towards new supply, which is the policy intent.
House and land approvals have remained above 10,000 a month through the Budget period, suggesting builders in growth corridors are still bringing product to market (ABS).
Higher-density projects that depend on investor presales remain under pressure, which is likely to keep apartment completions subdued into 2028.
For the investor, this means the next acquisition decision is not only about price and rent. It is about which asset class the tax system will favour for as long as the property is held. Our prior analysis covers the tax mechanics in detail. The point here is that the policy and the supply data are pointing the same way.
Forward Look: What to Watch Into 2027
The RBA’s own forecasts imply a long plateau rather than a sharp reversal. Inflation is expected to remain above 3% until the end of 2027 before easing to 2.5% in mid-2028, and the cash rate assumption path stays at 4.8% through 2027 and 2028 (RBA). Cotality expects the housing outlook to remain subdued through the rest of 2026 and into 2027.
The data releases worth tracking over the coming months:
ABS Building Approvals: whether private house approvals hold above 10,000 a month and whether the apartment pipeline recovers.
SQM Research monthly vacancy: whether Melbourne and Sydney vacancy keeps rising or stabilises below 2%.
Cotality Home Value Index: the pace of monthly declines, particularly in Brisbane, Perth and Adelaide where rents are strongest.
RBA statements: any change to the cash rate assumption path or the unemployment forecast.
None of these indicators removes risk. Values can fall further, vacancy can rise, and the labour market can weaken faster than the RBA expects. What the current data does show is that the conditions that create a rental shortage in 2027 and 2028 are being set now, while prices are falling.
What This Means for You: Falling values and rising rents are not contradictory. They describe a market where the cost of borrowing has reset prices while the supply pipeline remains short of what the population needs. Our directional view is that investors focused on building a portfolio, creating passive income, retiring earlier or creating generational wealth should treat this correction as an entry window for new build house and land in corridors where vacancy is tight and approvals are not running ahead of demand, sourced on titled land with a vetted independent builder rather than through developer off-the-plan stock. If you are seeking clarity on where to start, or want to pay down debt faster before your next purchase, stress-test any acquisition at today’s 4.85% cash rate plus a further rise before committing.
Next Step: Map This Data to Your Portfolio
Want to see how the November supply, vacancy and rent data applies to the corridors you are considering? Book a Discovery Session and we’ll walk you through our corridor supply and rental gap analysis framework, then show you how it maps to your borrowing position and wealth goal.
Disclaimer: Legacy Property Investments provides property sourcing and strategic property analysis. Any information provided is of a general nature and does not constitute financial, legal, taxation, or investment advice. We strongly recommend seeking independent professional advice from a licensed financial adviser, accountant, and solicitor before making any property investment decision. Past performance is not a reliable indicator of future performance. Investing in property involves risk, including the potential loss of capital.