Should you sell or rent out your home before buying again?

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Sell vs. rent: at a glance

Selling your home before you buy may suit you if:

  • You want a bigger deposit for your next purchase

  • You prefer simpler finances with one mortgage

  • You do not want landlord responsibilities

Renting out your home may suit you if:

  • You want to keep the property as an investment

  • You can manage two mortgages

  • You want flexibility if the market is not ideal for selling

How selling or renting affects buying your next home

Your choice can shape what you can afford next.

  • Selling first may increase your deposit and reduce how much you need to borrow.

  • Renting out means lenders assess both mortgages and your expected rental income.

  • Rental income is usually not counted in full, which can affect borrowing power.

  • This may influence your price range, timing, or loan structure when buying your next home.

Option 1: Selling your home to buy again

Selling your current home is often the most straightforward option when upgrading. It allows you to reset your finances before moving on to your next purchase.

Pros of selling

  • Unlock equity for a bigger deposit: Selling can free up value you have built in your home, after costs, which may help reduce how much you need to borrow next.

  • Simpler finances: You usually move from one home loan to another, rather than managing two loans at the same time.

  • No landlord responsibilities: You avoid managing tenants, maintenance, or rental compliance.

Cons of selling

Miss out on potential future growth: If property prices rise after you sell, you no longer benefit from that growth.

Selling costs apply: These can include agent fees, marketing, and legal costs.

Timing matters: If the market is softer when you sell, your home may take longer to sell or achieve a lower price.

Option 2: Renting out your home and buying another

Renting out your current home means turning it into an investment property while purchasing your next place to live.

Pros of renting out

Rental income can help: Rent may help cover part of your new mortgage, although it may not cover all costs.

Exposure to future growth: You keep ownership of both properties, which may support long-term wealth building.

Flexibility: Renting can be a short or long-term option if selling does not feel right now.

Cons of renting out

Two mortgages to manage: This can increase financial pressure if income changes or costs rise.

Vacancy and maintenance risks: The property may not always have a tenant, and repairs are your responsibility.

Ongoing landlord obligations: Even with a property manager, you remain responsible for the property.

Key financial things to think about

Before deciding whether to rent or sell, it helps to pressure-test your finances. 

  • Can you afford two mortgages if rent drops or stops?

  • Do you have enough equity to buy again without selling?

  • How comfortable are you managing higher repayments if rates change?

Tax considerations 

Renting out or selling a property can affect your tax situation in different ways. Outcomes depend on individual circumstances, and rules can change over time. Understanding that tax may be impacted is an important part of deciding whether to sell or rent out your home.

Get help deciding your next move

Choosing between renting out vs selling your home can feel complex, especially when you are also planning to buy your next place. A home loan specialist can help you understand:

  • How each option affects your borrowing power

  • What your deposit options may look like

  • Your possible next steps based on your situation

We’re here to help if you have any questions.

Source: NAB
Reproduced with permission of National Australia Bank (‘NAB’). This article was originally published at https://www.nab.com.au/personal/life-moments/home-property/buy-next-home/renting-out-vs-selling
National Australia Bank Limited. ABN 12 004 044 937 AFSL and Australian Credit Licence 230686. The information contained in this article is intended to be of a general nature only. Any advice contained in this article has been prepared without taking into account your objectives, financial situation or needs. Before acting on any advice on this website, NAB recommends that you consider whether it is appropriate for your circumstances.
© 2026 National Australia Bank Limited (“NAB”). All rights reserved.
Important: Any information provided by the author detailed above is separate and external to our business and our Licensee. Neither our business nor our Licensee takes any responsibility for any action or any service provided by the author. Any links have been provided with permission for information purposes only and will take you to external websites, which are not connected to our company in any way. Note: Our company does not endorse and is not responsible for the accuracy of the contents/information contained within the linked site(s) accessible from this page.

Finances feel tight? Check if your home loan is the right fit

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For many households, managing the cost-of-living has become an ongoing balancing act. Grocery bills, insurance premiums, utility costs and everyday expenses have all increased in recent years, placing pressure on household budgets.

If this sounds familiar, you’re not alone, 77 per cent of Australians currently feel extremely or somewhat stressed about their finances, according to a recent Finder poll.i, ii

For most homeowners, mortgage repayments are the largest item in the household budget and can be a large contributor to financial stress. More than 50 per cent of mortgage holders consider themselves to be suffering from mortgage stress.iii Despite this, many borrowers haven’t reviewed their loan in years, even with significant changes in their financial circumstances and the lending market.

That’s why refinancing can be worth considering.

Small changes can make a big difference

When household budgets are under pressure, even modest savings can have a meaningful impact.

Refinancing may help reduce your repayments, improve cash flow or provide access to loan features that better suit your current needs. While every situation is different, a home loan review can identify opportunities to ensure you’re not paying more than you need to.

The objective isn’t simply to switch lenders. It’s about making sure your mortgage is working as effectively as possible for your circumstances.

Your loan may no longer be the best fit

Many borrowers take out a home loan and leave it unchanged for years. During that time, however, a lot can happen.

Your property’s value may have increased, your income may have grown, or your credit profile may have strengthened. These changes can improve your position with lenders and potentially open the door to more competitive loan options.

At the same time, lenders are constantly updating their products and pricing. A loan that was highly competitive when you first took it out may no longer represent the best value available today.

That doesn’t necessarily mean changing lenders is the right move, but it does mean it’s worth understanding your options.

More than just a lower interest rate

While securing a competitive interest rate is often a key motivation for refinancing, there are other benefits that may be just as valuable.

Some borrowers are looking to improve cash flow and create more breathing room in the household budget. Others want access to features such as an offset account, additional repayment flexibility or redraw facilities that help them manage their finances more effectively.

Refinancing can also provide access to equity that has built up in a property over time. This may help fund renovations, support future investment plans or provide greater financial flexibility.

For some households, refinancing can also be an opportunity to consolidate higher-interest debts and simplify their finances into a more manageable structure.

Signs it may be time for a review

One of the clearest signs is if you haven’t reviewed your home loan for several years. The market may have changed considerably since your loan was established.

It can also be worthwhile reviewing your options if your fixed-rate period is coming to an end. Many fixed-rate loans revert to a lender’s standard variable rate when the fixed-term expires, which can result in a noticeable increase in repayments.

A review may also be worthwhile if your property has increased in value, your credit score has improved, you’re planning renovations, considering an investment purchase or simply looking for ways to improve your household cash flow.

The value of professional advice

With hundreds of loan products available and lenders continually adjusting their policies and pricing, comparing options can be overwhelming.

We can help assess your current loan, compare available alternatives and identify whether refinancing is likely to deliver a meaningful benefit. In some cases, the best outcome may be staying exactly where you are. The value comes from knowing you’ve explored your options and can move forward with confidence.

A refinance review won’t be the solution to every cost-of-living challenge, but it could help ensure you’re not paying more than necessary on one of your biggest financial commitments and possibly take some pressure off your finances. And that’s a worthwhile place to start.

If it has been a while since your last home loan review, we’d be happy to help you understand your options.

i,ii, iii Finder’s Cost of Living Pressure Gauge | Finder

Avoiding mortgage stress

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If you’re getting ready to buy a home, plan ahead to keep your finances under control and avoid mortgage stress.

What is mortgage stress?

Mortgage stress is when your home loan repayments take a serious toll on your finances, stretching your budget to breaking point. Usually this happens when a big portion of your income is directed towards your mortgage, leaving little for everyday expenses like groceries, bills and entertainment. Rising interest rates, unexpected costs like car repairs, a medical emergency, or a drop in income can compound this stress even further.

Some common signs of mortgage stress include:

  • living paycheck to paycheck

  • regularly dipping into your savings or relying on credit cards to get by 

  • difficulty budgeting for unexpected repairs or medical bills

  • mortgage repayments making up more than 30% of your pre-tax income.

While 30% isn’t a hard-and-fast rule, it’s a handy benchmark to keep in mind as a flag for when housing costs may be putting strain on your budget.

How to avoid mortgage stress

When you’re new to the housing market, avoiding mortgage stress can seem overwhelming. The good news is, with the right plan of action, you can keep your finances balanced and your stress levels in check. We highlight some of the key steps you can take before applying for a home loan to help prevent the possibility of mortgage stress.

Borrow within your means

When you apply for a mortgage, it’s tempting to opt for the biggest loan your lender is willing to offer. But just because you can borrow that amount, doesn’t mean you should. Ideally, aim for an amount that leaves enough in your monthly budget for fixed costs such as groceries and bills, as well as the occasional spend on entertainment, dining out and travel. It’s important to track expenses and above all, be realistic about what you can comfortably afford, not just today, but also in the future.

Use a borrowing power calculator to estimate how much you can afford and what your repayments might be for any potential interest rate rises.

Build an emergency fund

Life is full of surprises, and sometimes these surprises are expensive. This is when a financial buffer or emergency fund with about three to six months of living expenses saved can make a huge difference. Emergency funds are helpful because they offer you room to breathe in case unexpected costs come up or your income unexpectedly reduces. Remember to start small and build up your emergency fund over time, treating it as a safety net for your mortgage and everyday budget.

Avoid taking on other debts

When you’re planning to take on a debt as large as a home loan, having other debts may fast–track your financial stress. That’s why it’s crucial to keep car loans, credit cards and personal loans in check. The less you owe elsewhere, the more you can focus on your mortgage without feeling like you’re stretched too thin.

Get good at budgeting

A solid budget is your best friend and will help you avoid mortgage stress. Make a habit of tracking your income and expenses to see where you’re spending and where you can cut back. Also remember to factor in the upfront and ongoing costs of homeownership like insurance, maintenance and rates, so there are no nasty surprises along the way. Use a budget planner to help you save.

Plan for interest rate changes

If you’re planning to choose a variable rate home loan, it’s important to be mindful that even the smallest of interest rate rises can increase your home loan repayments. A good tip is to budget for repayments that are slightly higher than your current rate. That way you’re covered if rates rise and have extra cash in your budget if they stay low.

Consider fixed rates or offset accounts

To avoid the unpredictability of rate rises, a fixed rate home loan can offer more peace of mind by locking your repayment costs for a set period. Alternatively, if you are considering a variable rate home loan, getting an offset facility with your loan account can reduce the amount of interest you’ll pay over the life of your loan, helping you save substantially. You can also split your loan and take advantage of both types of rates.

Regularly review your loan

Don’t set and forget your mortgage. Check the latest interest rates every year or so to see if there’s a better deal available. Refinancing to a lower interest rate with better loan features can potentially save you a lot of money and make managing repayments easier.

What to do if you experience mortgage stress?

Don’t wait until the situation escalates into a full-blown crisis. Most lenders will be willing to work with you if you’re upfront about your situation. If you’re a home loan customer and are facing difficulty making repayments, we can support you to discuss your options and find a solution. While it can feel overwhelming in the short term, financial difficulty can be managed.

Source: NAB
Reproduced with permission of National Australia Bank (‘NAB’). This article was originally published at https://www.nab.com.au/personal/life-moments/home-property/buy-first-home/avoid-mortgage-stress
National Australia Bank Limited. ABN 12 004 044 937 AFSL and Australian Credit Licence 230686. The information contained in this article is intended to be of a general nature only. Any advice contained in this article has been prepared without taking into account your objectives, financial situation or needs. Before acting on any advice on this website, NAB recommends that you consider whether it is appropriate for your circumstances.
© 2026 National Australia Bank Limited (“NAB”). All rights reserved.
Important: Any information provided by the author detailed above is separate and external to our business and our Licensee. Neither our business nor our Licensee takes any responsibility for any action or any service provided by the author. Any links have been provided with permission for information purposes only and will take you to external websites, which are not connected to our company in any way. Note: Our company does not endorse and is not responsible for the accuracy of the contents/information contained within the linked site(s) accessible from this page.

Is it a gift or a loan when parents help kids buy a home? How to avoid family fights over money

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Over recent decades, many Australian families have relied on getting money from the “Bank of Mum and Dad” to help with home purchases.

But our latest research shows there are growing legal risks from that trend.

We spoke to 80 older parents and adult children. Most were from Sydney and had either given or received family money to help with buying a home. Typically, people in this study had provided or received an average of $75,000, though in one case it was $500,000.

We found both the parents and adult children in our study were often unclear whether the money was a gift or loan. Surprisingly few had even written down anything to make that clear.

That lack of clarity and communication has the potential to cause bitter family rifts, elder financial abuse and costly legal battles in the Family Court.

What counts as a gift?

If you’re applying for a home loan, many banks require written proof that funds from the “Bank of Mum and Dad” are genuinely a gift – meaning nothing is expected in return.

This is because a parental loan that needs repayments reduces how much the home buyer can actually afford to borrow from the bank.

In our study, some participants were asked to sign gift letters for their children to meet the bank’s requirements, even when they viewed the money as a loan. Henry, aged 60, described this scenario:

At the time we had to tell the bank that it was a gift. But in hindsight we said to [our son], ‘One day we’d like to see some of that come back to us’. Because it was $50,000 and it’s a lot of money to just give away.

Gifts provided to children by their parents have a specific status under Australian law, known as “presumption of advancement”. In the absence of proof, this means funds transferred from a parent to a child, regardless of their age, are most likely to be seen as a gift.

In practice, this puts the burden of proof on parents if they expect any future repayment.

Giving or receiving money can also affect Centrelink payments, so always check that first.

What counts as a loan?

A loan requires repayment of funds under certain terms and conditions. Typically, a loan involves an agreement (verbal or written) between parties. This includes repayment terms, whether interest applies, and a repayment schedule.

Written loans may be informal or formal.

Informal agreement documentation – such as an email or a letter – can help people involved with the loan remember what they agreed to as time passes.

Formal agreement documentation can be drafted by a lawyer. In some cases, it may also be signed and witnessed, with an extra copy held for safekeeping at the lawyer’s office.

The distinction between gifts and loans may appear relatively clear-cut. But in practice, this is rarely the case.

In this study, we found the relationship between gifts and loans often got blurred. For instance, loans often turned into gifts over time when repayments stopped being made or requested.

In several cases, parents we spoke to effectively “wrote off” loans (meaning they stopped expecting payments) when their adult children experienced financial hardship, a job loss or became parents.

In many cases, we found the parent and adult child had different understandings of whether the money transferred was a gift or loan.

For instance, Oliver, aged 60, helped his daughter Gianna, 34, with a deposit for a house, saying:

It’s more a gift. I don’t expect to see any of it back, but I made it clear to her that she had to use it to buy a property.

However, when Gianna was asked about the deposit money, she said:

That’s a good question. There’s not really any terms on it – no interest or any of that. But I’m going to repay it back. I think that’s what they’re expecting of it.

 

We need to talk about money

While conducting this research, we were struck by the lack of communication between family members.

Differing understandings of the funds being a gift or a loan typically resulted from unspoken assumptions.

Most of the participants were reluctant to speak about money, even with close family members. They often felt their arrangements were private family matters that did not need to be discussed with outside parties.

As a result, none of the 80 participants in our study sought professional legal or financial advice.

Very few had documented their agreement in any way, with the majority of money transfers remaining purely verbal.

Is it a gift or loan? Spell it out

To avoid family conflict down the track, it’s strongly recommended:

  • having clear and open conversations about gifts or loans

  • the expectations (or not) of repayment

  • what would happen if circumstances of either party change

  • putting all those shared expectations in writing.

Also seek professional financial and legal advice before transferring money. Although this may appear costly and unnecessary, it can help to avoid financially and emotionally costly consequences.

Free or low-cost legal help is available at community legal centres, while some universities also have legal clinics.

Disclaimer: This article provides general information only and does not take into account your personal objectives, financial situation or needs. It is not intended as financial or legal advice.

Source: This article is republished from The Conversation

 

How Australia’s new negative gearing rules might accidentally favour some property investors

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For the best part of a century, Australian property investors have enjoyed a generous tax arrangement found in few other countries: the infamous “negative gearing”.

Now, sweeping reforms to limit negative gearing to new builds and also change the way capital gains are taxed have become law.

The federal government hopes to give first-home buyers a better shot at buying existing homes and at the same time redirect investor cash towards increasing housing supply.

However, some of the practical implications of these changes haven’t received much attention. Here are three possible side effects which could now distort the property market in unexpected ways – including favouring investors.

What is negative gearing?

Most people associate negative gearing with real estate. But it can apply to any kind of investment.

Here, gearing simply means borrowing money to invest. And if an investment is negatively geared, it means the expenses related to owning it (such as the interest payments on a mortgage) are greater than the income it generates (rental payments).

For property investors, these expenses could also include other costs, such as real estate agent fees, council and water rates, and so on.

Under the old rules, high-income earners were able to use a rental loss immediately to reduce their tax bill on other income, such as a salary.

Coupled with the way capital gains were taxed at a 50% exemption, the arrangement allowed many property investors to tolerate – perhaps even welcome – a rental property running at an apparent loss for tax purposes, while the property’s value continued to climb.

What’s changed?

Importantly, negative gearing hasn’t been abolished altogether. It has just been heavily restricted in the context of residential property.

Under the old rules, any rental expenses exceeding rental income could be deducted against an investor’s salary, business or other income. For purchases made after the cut-off time of 7:30pm on budget night on May 12, this arrangement is reserved for new builds only.

For existing properties, unused excessive expenses are now “quarantined”. This means they can only be used to offset future rental profits or the profit an investor makes when they eventually sell the property – not against other forms of income.

At the same time, the 50% capital gains exemption has been replaced by an “indexation system” that adjusts the cost of a property to take inflation into account.

Importantly, anyone who purchased a property before the cutoff time has had their arrangements “grandfathered”, meaning they can continue to deduct excess rental expenses from other income.

However, some workarounds and other distortions still exist.

Negative gearing has been restricted to new builds.

Converting home into an investment

First, for people who currently own just one property to live in, a unique door remains open.

Under the legislation, to be eligible for the old negative gearing arrangements, a property only needed to be owned (or under binding contract) at the cutoff time. It did not need to be an investment property at this time.

By buying another property in the future and moving into it, some people may be able to technically give an existing build (their former home) the traditional negative gearing treatment once it becomes a rental property.

While this “loophole” may not have huge impacts on the housing market, some economists have speculated it could disincentivise some homeowners from selling property, to retain the option to negatively gear later.

A big advantage for ‘grandfathered’ landlords

Under the new laws, “grandfathered” landlords (who owned properties before budget night) get a massive structural advantage. And this isn’t just because they can continue to negatively gear their existing properties.

If those older properties become profitable (positively geared) as the mortgage is paid off and rents rise over time, these investors would normally start paying tax on their rental profits.

However, the new tax law allows these investors to use the excess profit from their old portfolio to immediately absorb and offset the quarantined losses of newly acquired properties.

Basically, they keep some of the tax advantages of negative gearing – even though their properties aren’t making a loss for tax purposes.

Rental losses could get ‘trapped’ in property

As a result of the new “quarantine” rule, some investors will end up with rental property expenses they have not been able to deduct, leading to a pool of undeducted rental property expenses.

Those expenses are not completely lost − they can potentially be used to reduce the tax on any capital gain realised when the property is sold.

However, because these losses can’t be used to offset any other types of income (only those related to property), landlords have an incentive to hold onto property until they are sure of a capital gain large enough to make use of these undeducted rental property expenses, which are otherwise “trapped”.

If investors delay selling for tax reasons, the reforms may reduce the supply of established homes available for sale, placing upward pressure on housing prices.

Making housing more affordable?

Supporters of these changes argue that this is a great chance to make houses more affordable and create opportunities for new entrants to get into the property market more easily.

The theory is straightforward. If you strip away the tax benefits of buying existing houses, wealthy investors will stop outbidding everyday people just trying to buy a home, cooling down property prices.

The are early signs Australia’s housing market is beginning to cool. However, it remains to be seen if the end of negative gearing will have a more long-term impact on housing affordability in Australia.

Disclaimer: This article is not tax advice, it is for educational purposes only. Taxpayers should seek advice from a registered tax agent or suitably qualified professional.

Source: This article is republished from The Conversation

The shifting landscape for spring buyers

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A softer market doesn’t necessarily mean it’s easier to buy property. It simply means different opportunities may exist for buyers who are prepared.

Spring has long been Australia’s busiest property season. More homes come onto the market, open homes become busier and buyers begin preparing for what has traditionally been one of the most competitive times of the year.

 

For many, the past few years have shaped the way they think about buying property. The message has been simple. Move quickly, be ready to compete and don’t hesitate when the right property comes along.

That advice reflected the state of the market. Strong demand and limited supply meant buyers often had little time to make decisions. Missing out on one property could mean waiting months for another suitable opportunity.

This spring, however, buyers may need to rethink their approach.

While market conditions have softened, compared with recent years, this doesn’t necessarily mean property has suddenly become cheap or that competition has disappeared. Well-presented homes in desirable locations will continue to attract strong interest. What has changed is that buyers may once again have an opportunity to make decisions on their own terms.

A softer market doesn’t guarantee buying a property will be any easier. It simply rewards buyers who are prepared.

Changing conditions call for a different approach

One of the biggest mistakes buyers can make is approaching today’s market as though conditions haven’t changed.

For years, purchasing property has largely been about speed and competition. Buyers became accustomed to making quick decisions, stretching their budgets and compromising on important features simply to remain competitive.

Today’s market may be rewarding a different set of skills.

Rather than asking whether you can secure a particular property, ask whether it is the right property for your circumstances, both now and in the years ahead. Taking the time to understand local market conditions, establish a realistic budget and identify your non negotiables can ultimately lead to better decisions.

That is not an excuse to procrastinate, it simply means recognising that preparation and patience can be just as valuable as speed.

Don’t try to time the bottom of the cycle

Softer market conditions can also create a different challenge for buyers. The temptation to wait.

Many prospective purchasers are wondering whether prices will continue to soften and whether they should delay their plans in the hope of buying at the bottom of the market. The reality is that timing the property market perfectly is incredibly difficult.

No one rings a bell to announce that prices have reached their lowest point and by the time confidence begins returning to the market, conditions can change quickly. Buyers who spend months or years waiting for the perfect opportunity often discover they have simply traded one form of uncertainty for another.

For owner-occupiers, purchasing a property should be viewed as a longer-term decision. Buying the right property at a price that comfortably fits within your budget will almost always prove more important than purchasing at the precise bottom of the market cycle.

Rather than focusing on where prices might be in six months’ time, buyers should ask themselves a different question. Are they financially ready to submit a competitive offer the moment the right house hits the market?

Preparation is key

Preparation remains one of the greatest advantages a buyer can have, regardless of market conditions.

Before you begin attending inspections, it’s worth understanding exactly what your financial position looks like. How much can you comfortably borrow? What will your repayments look like? Have you factored in the costs beyond the purchase price?

Obtaining a home loan pre-approval before you begin your property search remains one of the most important steps prospective buyers can take. Not only does it provide clarity around your borrowing capacity, but it also allows you to negotiate with confidence when the right opportunity presents itself.

Speaking with us early in the process can help you understand your lending options and ensure your finance strategy aligns with your longer-term goals. If you have your finances organised, you won’t have to rush to arrange financing after you’ve found the ideal property; instead, you’ll be prepared to act when it becomes available.

Sometimes the smartest property decision isn’t finding the perfect moment to buy. It’s being financially ready when the timing is finally right.

Quarterly property update September 2026

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Australia’s housing downturn broadens

The latest quarter marks a clear shift from a concentrated correction to a broad-based decline in housing values.

Over the past three months national values fell 3.1 per cent, with the combined capitals down 3.7 per cent and regional values down 1.2 per cent.

The downturn has also broadened significantly. 93 per cent of capital-city suburbs recorded falling values through winter, more than double the 45.8 per cent recorded through autumn. Every capital city except Darwin declined over the past three months with Sydney remaining the weakest major market.

A narrowing two-speed market

Higher-value properties continue to record weaker conditions as borrowing costs and serviceability constraints limit purchasing capacity. However, the gap between higher- and lower-value housing has narrowed, with lower-quartile values now also falling as affordability pressures and weaker demand spread.

Government grants for first-home buyers should continue to support the affordable end of the market, although it is no longer insulated from broader weakness.

Regional markets remain more resilient

Regional markets continue to outperform the capitals, although the gap is narrowing. The combined regional index fell 0.4 per cent in August and 1.2 per cent over the quarter, compared with a 3.7 per cent quarterly decline across the capitals.

Demand and selling conditions weaken

This weaker phase of the housing downturn has been largely driven by declining demand, with Cotality’s estimate of home sales tracking 15.5 per cent lower than at the same time last year.

As housing demand weakened, properties are taking longer to sell and advertised supply is now tracking well above both one year-ago and five-year average levels across most capital cities, giving power to buyers in the spring property market. 

Supply remains an important support

New housing supply also remains insufficient relative to underlying demand. Elevated construction costs, capacity constraints and feasibility challenges continue to limit housing completions.

Constrained supply should help limit the depth of the downturn, even as weaker demand weighs on established property values.

Interest rates, inflation and employment

Higher interest rates remain a significant headwind, with high mortgage costs, reduced borrowing capacity and cost-of-living pressures weighing on buyers. Higher-than-expected core inflation has also increased the risk of another rate rise, which would put further pressure on households.

Employment remains an important buffer. Low unemployment should help limit widespread arrears or distressed selling, although a softer labour market would further weaken housing demand.

Looking ahead

The next few months are likely to reveal continued downward pressure, although the scale of the correction will vary between markets. Low housing supply, relatively low unemployment and first-home-buyer support provide some underlying support. However, falling values, weaker sales, rising stock and softer selling conditions indicate the market has moved decisively into a buyer-favoured phase.

Dwelling values over the quarter

Melbourne

The Victorian capital decreased by 3.9 per cent over the quarter, taking the city’s median dwelling value to $786,718. Melbourne values are now 4.7 per cent lower than a year ago and 6.8 per cent below the March 2022 peak. The gross rental yield is currently 4.0 per cent in August.

Sydney

Sydney recorded a 4.7 per cent decline over the quarter, resulting in a median dwelling value of $1,222,718. Values are now 4.6 per cent lower than a year ago and 7.1 per cent below the February 2026 peak. The gross rental yield for August remains the lowest of the major capitals at 3.3 per cent.

Brisbane

The Queensland capital recorded a 2.7 per cent decline over the quarter, taking its median dwelling value to $1,080,142. Despite the recent falls, Brisbane values remain 10.8 per cent higher than a year ago. The gross rental yield for August was 3.4 per cent.

Canberra

The national capital recorded a 2.8 per cent decline over the quarter, with the median dwelling value now $864,998. Canberra values are 0.4 per cent lower than a year ago, while the gross rental yield is currently 4.3 per cent in August.

Perth

Perth recorded a 3.2 per cent decline over the quarter, taking its median dwelling value to $999,987. Despite the quarterly fall, Perth remains one of Australia’s strongest-performing markets, with values 15.6 per cent higher than a year ago. The August gross rental yield is currently 3.9 per cent.

For more information about how you might be able to purchase a property in the current market, get in touch with us today.

Source: Cotality Home Value Index, September 2026. Index results as at 31 August 2026.

Mortgage offset accounts

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Understand how a mortgage offset account works, to decide whether it might be worth considering. 

What is a mortgage offset account?

A mortgage offset account is a transaction account linked to your home loan. It’s generally available with a variable rate home loan.

The balance in the offset account reduces the amount of your loan that’s charged interest.

For example, if you have:

  • A home loan of $500,000, and

  • $20,000 in your offset account

You’ll only be charged interest on $480,000.

You don’t earn interest on the money in your offset account. Instead, you save by paying less interest on your home loan. Over time, paying less interest means more of your repayments go towards reducing the loan balance. This can help you pay off your home sooner.

How does a mortgage offset account work day-to-day?

An offset account works like an everyday bank account. You can:

  • have your salary paid into it

  • pay bills and set up direct debits from it

  • use a debit card with it.

Interest on most home loans is calculated daily; each day, your lender subtracts your offset account balance from your loan balance before calculating interest.

The more money you keep in your offset account, and the longer it stays there, the more interest you can save.

Is it worth having an offset account?

An offset account may be worth it if you:

  • have a large loan, and

  • keep a regular savings balance, and

  • want flexible access to your money.

It may not be worth it if:

  • you usually keep a low balance in the offset account, and

  • the loan has higher fees to include an offset feature, and

  • the interest rate is higher than similar loans without an offset account.

Some lenders charge annual package fees and higher interest rates for loans eligible to be linked to offset accounts and monthly account fees for offset accounts. It’s important to compare the cost of the fees with the interest you expect to save.

The higher your loan and the larger your offset balance, the greater the potential savings. But be realistic about whether you’d be able to justify any extra cost of having an offset account.

Using a credit card with an offset account

Some people use a credit card alongside their offset account to maximise interest savings.

For example:

  1. have your salary paid into your offset account,

  2. use a credit card for everyday spending,

  3. pay your credit card balance in full by the due date.

This keeps more money in your offset account for longer.

However, this strategy only works if you’re sure you can repay the credit card in full each month. The average credit card interest rate, at 18%, is much higher than home loan interest.

The difference between an offset account and redraw facility

Both an offset account and a redraw facility can potentially help you save on interest, but they work in different ways.

An offset account: Is like a separate transaction account linked to your mortgage. You can still access your savings whenever you need them. Your savings reduce the amount of your loan that gets charged interest.

A redraw facility: These are extra repayments you make go straight onto your loan. You may be able to withdraw those extra repayments if you need to. How and when you can access them depends on your loan terms.

Before you decide whether you need either option, check your lender’s fees, interest rate, and access rules.

What to consider before you apply for an offset account

Before you choose a loan with an offset account, consider:

  • the interest rate – would it be lower if you didn’t select an offset eligible loan?

  • any annual or package fees you’ll be charged for an offset eligible loan

  • any monthly fees for the offset account

  • whether the offset is 100% (where all the money in your transaction account can offset the home loan) or partial (where only a portion of your transaction account balance can offset your home loan)

  • how it compares with a redraw facility

Even small differences in interest rates and fees can add up over time, so it’s important to compare the cost of the fees with the interest you expect to save.

Talk to us for more information.

Source: Moneysmart
Reproduced with the permission of ASIC’s MoneySmart Team. This article was originally published at https://moneysmart.gov.au/home-loans/mortgage-offset-accounts
Important note: This provides general information and hasn’t taken your circumstances into account.  It’s important to consider your particular circumstances before deciding what’s right for you. Although the information is from sources considered reliable, we do not guarantee that it is accurate or complete. You should not rely upon it and should seek qualified advice before making any investment decision. Except where liability under any statute cannot be excluded, we do not accept any liability (whether under contract, tort or otherwise) for any resulting loss or damage of the reader or any other person.  Past performance is not a reliable guide to future returns.
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Why many young Australians face a more winding pathway to home ownership

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Following young Australians for a generation

Recent research used 19 years of Australian data from the long-running Household, Income and Labour Dynamics in Australia (HILDA) survey to follow the same people over many years to understand their housing trajectories: the pathways they take through the housing system over time.

Instead of asking only who owns a home today, this approach gives us a clearer picture of who is able to become a homeowner, when they buy, how long they remain a homeowner and what happens if they sell for whatever reason.

Our study applied this approach to young Australians who were living in the family home at the beginning of the 2000s, following their housing experiences for almost two decades to 2019.

Only around one in five (22%) followed the traditional pathway of moving out of the family home, then renting, before buying a home. A smaller group (12%) moved directly into home purchase, while a similar share (13%) entered renting and remained there throughout the study period.

Almost half (46%) followed a very different path over the two decades of our study, moving in and out of renting, home ownership and back to the family home.

Disjointed journeys

Understanding these different patterns matters, because two people who are seemingly in the same position – such as two renters – do not necessarily have the same chances of becoming homeowners.

One renter may be spending a short period in rental housing before buying a first home. But another may have rented for many years, with no clear route into ownership.

Alternatively, a homeowner may have followed a relatively stable path, or arrived there only after repeated moves in and out of the family home, or time renting.

Looking only at where people are today misses that history. It also misses how the timing, sequence and duration of housing experiences shape what becomes possible later in life.

The traditional pathway to home ownership for young people has changed. Christopher Hopkins/AAP

Home owners vs renters’ wealth

Our ongoing research at the Australian Centre for Housing Research is now investigating how wealth outcomes differ according to the housing pathways people follow.

Over five years, our preliminary work (which is yet to be peer-reviewed) suggests households who remained renters recorded only modest growth in median wealth.

Those who entered home ownership or remained mortgage holders accumulated several hundred thousand dollars more, while households that moved from ownership back into renting experienced substantial losses.

The important point is not simply that owners accumulated more wealth than renters. It is that different housing pathways seem to be associated with very different financial futures.

Two-tiered access to housing

Our findings do not mean housing alone determines people’s futures. Households begin with different incomes, family resources, education and opportunities.

But housing trajectories can reinforce people’s different starting points.

Those who gain access to ownership may accumulate housing equity – and therefore wealth – over many years. That equity can provide a buffer against unemployment, illness or relationship breakdown. It may also help fund retirement or support their own children into homeownership.

Those who remain outside ownership may face a very different long-term position. They may spend more of their income on rent, have fewer assets to draw on in a crisis and enter retirement without the protection of an owned home. This is how housing inequality can widen over time.

This longer-term trajectory view changes how we can think about housing policy. Its success cannot be judged only by today’s prices, supply figures or homeownership rate. These indicators tell us where the housing system is now, but much less about where it is taking people.

But as both our published and ongoing research show, small differences in the timing of entry into homeownership, the length of time spent renting, or a move out of ownership can accumulate into much larger differences in wealth and security later in life.

Source: The Conversation

Australia’s housing market is cooling. Perhaps our expectations should too

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After years of rapid growth, Australia’s housing market is beginning to cool. Auction show that mortgage arrears remain low. Fewer than 1% of housing loans are more than 90 days behind in repayments.

At the same time, most borrowers have built up substantial equity over recent years, and many remain has become one of the country’s biggest economic and social challenges. Yet we also tend to react negatively to any prospect of falling house prices.

. Gross domestic product (GDP) remains an important measure of economic activity, but it should sit alongside broader measures of productivity, wellbeing, inclusion and sustainability.

Housing deserves the same broader perspective.

House price appreciation is an outcome of the housing market. It is not the purpose of the market – and nor should be wealth generation.

The real objective must be a housing system that provides secure and affordable homes, supports sustainable construction, and remains accessible to future generations. Rising asset values matter, but they should not crowd out every other measure of success.

Source: The Conversation