The instinct to act in a falling market feels like control. Cotality’s resale data suggests it is closer to the opposite.
Six straight months of falling values do something to an investor’s hands. They start to itch.
Cotality’s Home Value Index fell 1.1% in September 2026, a sixth consecutive monthly decline that leaves national dwelling values 5.2% below their March peak. Over the three months to the end of September, 97% of capital city suburbs recorded a fall. The Reserve Bank then lifted the cash rate to 4.60% at its September meeting, a fourth rise this year and a 15-year high. Every reading on the dashboard is moving at once, and the urge it produces is close to chemical: do something. Sell the underperformer. Break the fixed loan. Rotate into the capital that fell least.
That urge has a name. Behavioural research calls it action bias, the preference for doing something over doing nothing when an outcome feels uncertain, even where the evidence favours standing still. In an asset class that is leveraged, illiquid and expensive to transact, it is among the costliest habits an investor can carry.
Why the brain rewards motion over judgement
Action bias is best documented in a study of professional goalkeepers facing penalty kicks. Keepers dive left or right on the overwhelming majority of attempts, though staying centred stops a higher share of shots. Diving and conceding feels defensible. Standing still and conceding feels like negligence. The dive is a defence against regret, not a calculation.
Investors run the same program. Work by Brad Barber and Terrance Odean on retail share traders found the most active 20% of households returned 10.0% a year after costs, against 17.1% for the market. Trading costs and overconfidence did the damage. Property applies a heavier version of the same tax. A share can be sold in seconds for a few dollars. An investment property carries agent commission, legal fees and stamp duty on the way back in, and those costs are charged against the whole asset, not the slice of equity the investor actually owns.
The trap is that activity reads as diligence. Refinancing and restructuring produce the feeling of a decision being made. Holding produces nothing visible for years.
What motion actually costs
Cotality’s Pain and Gain report for the June 2026 quarter puts a number on it. Of more than 94,000 resales, 95.4% made a nominal profit, down from 96.1% in the March quarter. The median gain was $371,000. The median loss was $45,000.
The hold periods are the part worth pinning to the wall. Profit-making resales had a median hold period of 9.1 years nationally, rising to 9.3 years for houses. Loss-making house resales had a median hold period of 4.4 years. The difference between a gain and a loss, on that data, looked less like suburb selection and more like elapsed time.
None of that makes holding a guarantee. It does suggest the investors who lost money were disproportionately the ones who acted early. A round trip in and out of a property consumes several years of growth in costs alone.
Vill Villapando
Patience is not passivity
The distinction matters, because the case for patience is not a case for inertia. Hesitating before a first purchase and churning a portfolio after one are different errors with the same feeling attached.
Patience is a position held deliberately, with criteria written down and a date set to review them. Inertia is a position held because deciding is uncomfortable. The test is whether the investor can state, in a sentence, the condition that would make them act. If they cannot, they are not being patient. They are stuck.
Evy Sia
A decision model for the itch
Three rules convert the impulse into a process.
Write the trigger list while the market is calm. Name the three or four conditions that would justify selling or restructuring: a serviceability shortfall reserves cannot cover, a structural change to the suburb’s demand drivers, a costed better use for the equity. Anything else is noise.
Impose a delay. Put a fixed waiting period, 30 days is enough, between the impulse and the instruction. Most urges to transact do not survive a month.
Cost the action before taking it. Calculate the full round-trip transaction cost as a share of current equity, not of the purchase price. Investors who do this once rarely need to be talked out of the second sale.
What to watch from here
The Reserve Bank board next meets on 3 November 2026, and Cotality publishes its next monthly index on the first business day of the month. Both will generate headlines, and neither is a trigger on its own.
The useful work this week is smaller and duller. Write the trigger list. Date it. File it somewhere retrievable, so that when the index prints a seventh consecutive fall, the decision has already been made by a calmer version of the same investor.
