Well, what an interesting time to be involved in Australian property!
If you’ve been following the news lately, you’d be forgiven for thinking the entire property market is heading for disaster. Prices are falling, interest rates are rising, and there’s certainly no shortage of predictions about how much further property values could decline.
Some of those concerns are understandable. We’re seeing genuine pressure on buyers, homeowners and investors.
But here’s something I’ve learned over more than two decades of property investing.
There is no such thing as one Australian property market.
One city can perform differently from another. One suburb can perform differently from the suburb next door. And sometimes, even two properties in the same street can achieve very different results.
So while the headlines are important, they’re only part of the story.
And that’s where I think investors need to be particularly careful.
Let’s Look at What’s Actually Happening
First, we can’t ignore the numbers.
According to Cotality’s latest Home Value Index, Australian dwelling values fell 1.2% in October 2026, marking the seventh consecutive month of declines. National values are now 6.7% below their March peak.
That’s a meaningful correction, and I’m certainly not suggesting otherwise.
But when we break the figures down, things become more interesting.
Brisbane recorded a 2.0% decline in October, while Perth fell 1.7% and Sydney declined 1.6%. Melbourne recorded a smaller monthly decline of 0.8%.
Yet even within that broader downturn, performance over the past twelve months hasn’t been identical.
For example, Adelaide’s dwelling values, despite falling during October, remained 3.7% higher than a year earlier.
That doesn’t mean Adelaide is immune to falling prices. It simply demonstrates why the period you’re looking at matters.
A property market can be down this month but still be ahead over twelve months. Another might have experienced a much larger correction after several years of growth.
And within those cities, individual suburbs and property types can behave differently again.
So when someone tells me that Australian property prices are falling, my next question is usually:
Which property market are we talking about?
Because that’s where the real conversation begins.
Interest Rates Have Gone Up Again
Now, there’s another factor we need to talk about.
On 3 November 2026, the Reserve Bank of Australia increased the official cash rate by another 0.25 percentage points, bringing it to 4.85%.
That’s the fifth rate increase this year, and the highest official cash rate since 2008.
Naturally, that’s putting pressure on borrowers.
Higher interest rates affect mortgage repayments, borrowing capacity and the amount of money households have available after meeting their expenses.
And investors aren’t exempt from any of that.
I remember the late 1980s and early 1990s, when mortgage interest rates were dramatically higher than they are today. But it’s important to remember that property prices and mortgage sizes were also very different back then.
So comparing interest rates alone doesn’t tell the whole story.
What matters is what those repayments mean for your household today.
Can you comfortably hold the property? What happens if interest rates rise further? Does the rental income support the investment? And have you allowed for the unexpected?
I’ve said this many times over the years: if the deal is good enough, the deal is good enough.
But that doesn’t mean ignoring higher interest rates.
It means doing the calculations properly before you commit.
We’re Still Seeing Opportunities on the Ground
Here’s where I’d like to share a couple of things we’re currently working on at Property Friends.
We’re approaching completion on another property in Far North Queensland where our project assessment indicates approximately $200,000 in potential capital uplift and an estimated gross rental yield of around 7%.
Now, those figures need to be understood in context.
The capital uplift is an estimate based on the project’s anticipated value relative to its cost, not a realised profit from selling the property. And a 7% gross rental yield is calculated before expenses such as interest, insurance, rates and property management.
The final result will depend on the completed property, its valuation, achieved rent and actual costs.
Nevertheless, it’s an example of why I believe property investors need to look beyond national averages.
We’re also working on an opportunity involving multiple homes with a proposed ten-year rental arrangement through a government-related organisation.
The proposed terms include a 6.5% initial gross rental yield, annual CPI-linked rent adjustments and rental payments that would continue even if an individual property were unoccupied, subject to the final agreement.
That’s an interesting structure, particularly when investors are concerned about vacancy periods.
But as with any long-term rental arrangement, the details matter. The financial strength of the tenant, contractual obligations, maintenance responsibilities, rent adjustments and termination provisions all need to be examined carefully.
A long lease can provide greater income visibility, but it doesn’t eliminate investment risk.
These are examples from our own pipeline rather than evidence that the wider market is performing strongly.
And I think that’s an important distinction.
The Right Area Still Matters. But So Does the Right Property.
One of the biggest mistakes investors can make is assuming that recent price growth tells them everything they need to know about a location.
It doesn’t.
You need to look at the local economy, employment opportunities, population trends, rental demand and how much additional housing is being planned.
And then you need to look at the individual property.
Is it the type of home people in that area actually want? Is the purchase price reasonable? What are the likely holding costs? If it’s a new build, have the site conditions, construction contract and delivery risks been properly assessed?
Because a good suburb doesn’t automatically make every property within it a good investment.
And the opposite is also true.
A softer market doesn’t necessarily mean every individual property has become a poor investment.
Sometimes, changing conditions create room for negotiation. But lower prices alone don’t create a bargain.
What makes the difference is understanding what you’re buying, why you’re buying it and whether it fits your circumstances.
What the Headlines Don’t Tell You
There is something else worth considering.
Cotality’s October research found that estimated national property sales over the previous three months were approximately 23% below the same period a year earlier.
That’s a significant reduction in activity.
Buyers are becoming more cautious, and many households are understandably reassessing what they can afford.
For some investors, the sensible decision may be to strengthen their cash reserves, reduce debt or wait until their financial circumstances improve.
For others, there may still be opportunities that warrant investigation.
The key is not allowing fear or excitement to make the decision for you.
ASIC’s MoneySmart guidance makes a similar point. Property investors need to assess rental income, borrowing costs, vacancies, ongoing expenses and the possibility that property values could fall.
That’s not negative thinking. That’s sensible investment planning.
Because no matter how attractive an opportunity might appear, it still needs to work financially.
So, Should Investors Be Worried?
I think investors should be paying attention.
There’s a difference.
The property market is clearly experiencing a downturn, and nobody can say with certainty where prices or interest rates will go next.
But I don’t believe the right response is to assume every property market will deliver exactly the same result.
Nor do I believe investors should rush into a purchase simply because someone describes it as an opportunity.
Research the location. Understand the numbers. Allow for the risks. Make sure your borrowing and household finances are sustainable.
And surround yourself with people who understand what they’re doing.
After more than two decades in property, my approach remains much the same.
The headlines tell you what’s happening in the broader market. The research tells you whether an individual investment is worth considering.
That distinction is becoming more important than ever.
And remember, you’ve gotta be in it to win it.
But make sure you’re making an informed decision before you get in.
Now, I’d Like to Hear Your Thoughts
With property prices falling and the RBA cash rate now at 4.85%, I’m interested to know how investors are approaching the market.
Would you consider buying an investment property in the current market, or would you prefer to wait until interest rates and prices stabilise?
And if you’re still looking, what matters most to you right now: purchase price, rental yield, location or long-term growth potential?
I’d genuinely be interested to hear your perspective.
Uwe Jacobs Property Strategist | Property Friends
If you’re reviewing your property strategy and aren’t sure what your next move should be, you can book a discovery conversation through the Property Friends website.
Disclaimer: This article is general information and market commentary only and does not constitute financial, legal, taxation or credit advice. Investment examples are project-specific and are not guarantees of performance. Estimates, yields and proposed contractual terms are subject to verification and may change. Property investment involves risk, and readers should seek appropriately qualified professional advice before making investment decisions.
