Australian home prices extend record-speed downturn as rate decision nears
Australian home prices fell for a seventh consecutive month in October, with capital-city values down 8.1% over seven months, a pace faster than the comparable decline in 2022-23. The latest fall comes as the Reserve Bank of Australia prepares to decide whether to raise rates again, adding pressure to buyers already retreating from the market.12
TL;DR
- The downturn is broadening beyond Sydney and Melbourne, with Brisbane and Perth leading the latest monthly falls and declines reported across suburbs in Brisbane, Perth and Adelaide.12
- The market pricing points to very low odds of a half-point-or-larger RBA increase, but it does not measure the likelihood of a smaller hike, which reporting says is widely expected.1M1
Across the coverage
The reported October declines use different geographic measures: Reuters puts national home values down 1.2%, while The Guardian reports a 1.4% fall across combined state and territory capital-city values. These figures describe different groups of homes rather than conflicting estimates of the same measure.12
Still to come
- The RBA's Tuesday rate decision will test whether policymakers tighten again as housing demand weakens. Its significance extends beyond borrowing costs: Reuters reports that policymakers have identified the housing market as a downside risk to the economy, while judging that most mortgage holders could withstand a 20% price fall without losing positive equity.
Cotality reported that national home values fell 1.2% in October from September, leaving them 6.7% below their March peak and 2.8% lower than a year earlier. Capital-city values fell 8.1% over seven months, exceeding the 7% decline recorded over the same period in 2022-23, when the RBA was raising rates sharply to curb inflation. The comparison puts the speed of this downturn in historical context, though it does not by itself establish how far prices will fall.1
The weakness is no longer concentrated in Sydney and Melbourne. Brisbane prices fell 2% in October and Perth prices fell 1.7%, while Sydney was down 1.6%; Cotality research director Tim Lawless said virtually every suburb across Brisbane, Perth and Adelaide had recorded a decline over the past three months. Lawless also said buyers had more homes to choose from and greater negotiating leverage, but low confidence and difficulty servicing loans were keeping them away. Property sales were 23% below a year earlier and 18% below their five-year average, according to Reuters.12
The RBA is widely expected to raise rates at its Tuesday decision, Reuters reported, with the central bank seeking to contain inflation. Prediction-market pricing observed on November 2 put the implied odds of an increase of 50 basis points or more at the November meeting at about 0.2%. That price concerns a large increase, not the broader likelihood of a rate rise; the distinction matters because the expected policy move could still add to mortgage pressure without meeting that threshold.1M1
Despite the steep decline, Reuters reports that the RBA has assessed most mortgage holders would remain in positive equity even if house prices fell 20%. The Guardian also notes that many owners retain substantial gains from earlier years, while highlighting that the mid-sized capitals that recorded especially strong growth in recent years are now in correction. Those cushions temper the immediate financial-stability concern, but do not remove the strain on prospective buyers or the risk that further rate rises weigh on demand.12
Sources
-
Home values fall for seventh consecutive month as interest rates dent demand · The Guardian · Nov 1
AI-generated from the linked reporting and prediction-market data. Market prices reflect traders’ expectations and can change.