Australian house prices fall seventh month: values now 6.7% below peak
Web StoryWatch this story in 15 seconds →Key takeaways
- Australian home prices fell 1.2% in October, the seventh straight monthly fall, and now sit 6.7% below their March peak.
- Capital-city values are dropping at their fastest pace in 40 years, led by Brisbane and Perth after years of huge gains.
- The central bank is expected to raise interest rates again next week, which could push prices down further into 2027.
Australia's housing market just hit a painful milestone. Home prices fell for a seventh month in a row in October. New data shows values are now 6.7% below their peak, and the drop is the steepest in 40 years.
What happened
Property data firm Cotality released the October figures on Monday National home prices fell 1.2% in October from September September's own figure was revised down to a 1.3% fall
That leaves values 6.7% below their March peak and 2.8% lower than a year ago
The capital cities are falling the fastest Their values dropped 8.1% in just seven months That beats the 7% slide of 2022 to 2023, when the central bank raised rates sharply after the COVID-19 pandemic
Cotality called this the fastest capital-city decline in 40 years
Mid-sized capitals led the October falls Brisbane home values fell 2.0% Perth dropped 1.7%
Both cities had gained roughly 50% over the past five years, so some of those gains are now unwinding Sydney fell 1.6% in the month Sydney values are now 1.5% below where they stood five years ago
Sydney's fall has been dramatic The median Sydney home now costs about $1,178,959. That is more than 10% below its February peak, according to AAP Brisbane's median fell hard in October too, but it is still 46% more expensive than five years ago
Perth was growing at about 25% a year just a few months ago
Why it matters
Australia has entered a true buyer's market Buyers have far more homes to choose from They have more power in negotiations
There is none of the panic buying seen a year ago, said Cotality research director Tim Lawless But the buyers are still staying away Lawless said low confidence and serviceability barriers are keeping them out
Property sales have collapsed Transactions are down 23% from a year ago They sit 18% below the five-year average
The drop is worst in Sydney, where sales volumes fell 30% High interest rates and higher taxes have drained demand, AAP reported Families can borrow less than before
Four rate rises since February have cut a typical household's borrowing power by about $71,000, said Cotality head of research Gerard Burg
The Reserve Bank of Australia is about to make borrowing harder again Markets expect it to lift rates for a fifth time next Tuesday to 4.85% That would be an 18-year high
Traders put the chance of a hike at almost 90% There is even a 20% chance rates climb to 5.1% Each hike lifts mortgage repayments and squeezes buyers further, as this explainer on rate decisions shows
Not every city is hurting equally Brisbane and Perth owners gained enormously in the boom years Burg said those owners "have a lot they can give up" without much direct pain
Sydney is different It led the downturn, and Sydney sellers feel it most Melbourne has been weak for five years but is now falling more slowly than other mainland capitals
Its lower prices are even drawing people in from other cities, reversing the COVID-era exodus
The downturn now echoes Australia's wider recession warning Policymakers call the housing slump a downside risk for the economy But they say banks remain safe
The Reserve Bank says most mortgage holders would still be in positive equity even if prices fell 20% Positive equity means your home is worth more than your loan
What happens next
The next move belongs to the Reserve Bank It meets next Tuesday A hike to 4.85% would push mortgage costs to their highest in 18 years
Burg expects prices to keep falling until rates turn Most economists do not see a rate cut until late 2027. That means the downturn could run for another year
Buyers face a choice Wait for lower prices and hope rates ease, or buy now while sellers feel the pressure Melbourne real estate agent Dexter Prack sees opportunities in the gloom
He told AAP some properties have fallen back to 2017 and 2018 prices On the prestige Mornington Peninsula, some homes are listed at discounts of 25% Prack has worked in real estate for 28 years
He said these are the biggest declines he has ever seen
For sellers, the message is sobering The national median home is worth about $63,400 less than in March Rising rates push asset prices down across markets
Until borrowing costs ease, buyers will stay cautious Anyone waiting for a quick rebound may wait a long time
This article is for information only and is not financial advice.
The slump has changed the market's mood A year ago, buyers rushed and prices soared Today, stock sits longer and sellers cut prices
October's data may not be the end of the slide It may just be the middle
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