Australian home prices fell for a seventh consecutive month in October, with the downturn deepening as markets anticipated another interest-rate increase from the Reserve Bank of Australia (RBA).
National home values dropped 1.2% from September, when prices fell by a revised 1.3%, Cotality data showed. Prices were 6.7% below their peak and 2.8% lower than a year earlier.
Capital-city prices declined at their fastest pace in 40 years, falling 8.1% over the seven-month period. That exceeded the 7% decline recorded over a similar period in 2022 and 2023, when the RBA raised borrowing costs sharply to curb inflation following the COVID-19 pandemic.
Brisbane led the monthly declines among mid-sized capitals, with values down 2.0%, while Perth prices fell 1.7%. The declines reversed part of the gains both cities had accumulated over the previous five years. Sydney home values dropped 1.6% in October and were 1.5% below their level five years earlier.
Cotality research director Tim Lawless said buyers had more properties to choose from and greater negotiating power, but were showing less urgency than when prices were rising rapidly. He attributed their absence from the market to weak confidence and continuing affordability and loan-servicing constraints.
Property transactions fell 23% from a year earlier and were 18% below the five-year average. Sydney recorded the steepest decline, with sales volumes down 30% year over year.
The housing market faces further pressure from the expected interest-rate decision next Tuesday. The RBA is widely expected to raise its policy rate for a fifth time, to 4.85%, which would be an 18-year high. Financial markets imply nearly a 90% probability of an increase and a 20% chance that rates could eventually reach 5.1%.
RBA policymakers have identified the housing market as a risk to economic growth but have expressed limited concern about financial-stability threats from falling property values. The central bank has said most Australian mortgage holders would still have positive equity even if home prices fell by 20%.
Sources: Investing.com News.