Australian home values have dropped for a seventh consecutive month, with prices in the capital cities now falling at the fastest pace in 40 years as rising mortgage rates scare off buyers.
asserted
rates → drop → buyers
Cotality data shows the centre of the downturn is also shifting away from Sydney and Melbourne toward the mid-sized state capital cities, with Brisbane and Perth leading October’s declines.
asserted
Brisbane → show → declines
Combined values across the state and territory capital cities fell 1.4% over the month.
asserted
values → fall → month
Cotality’s research director, Tim Lawless, said the downturn was now broad-based, with capital city home values down 8.1% since March.
asserted
values → say → March
“The mid-sized capitals, where home values recorded extreme growth conditions over the past six years, are now well and truly in a correction,” Lawless said.
asserted
Lawless → record → correction
“Virtually every suburb across Brisbane, Perth and Adelaide has recorded a drop in value over the past three months.”
asserted
suburb → record → months
The property market has been weighed down by four interest rate hikes this year, with a fifth widely expected when the Reserve Bank hands down its decision on Tuesday.
asserted
Bank → weigh → Tuesday
Most economists anticipate double-digit falls in Australian property prices as interest rates climb, with Morgan Stanley forecasting peak-to-trough drops of up to 15%.
asserted
Stanley → anticipate → %
Lawless said high interest rates were the “most significant downside influence”, while affordability challenges and a pullback in investors sparked by the government’s tax changes had also dented demand.
asserted
challenges → say → demand
Although the pace of decline is at four-decade highs, Lawless said that largely reflected how strong the property market had been over the period.
asserted
market → say → period
Australian home prices started to decouple from wages in the late 1980s, before a surge in the 90s and early 2000s propelled the country into a state of unaffordable housing exacerbated by investor-friendly tax settings that were only recently unwound.
asserted
that → start → settings
Over the past decade, property prices have doubled – or nearly doubled – in Adelaide, Brisbane, Perth and Hobart.
asserted
prices → double → Adelaide
Most homeowners are still sitting on sizeable gains despite the recent weakness.
asserted
homeowners → sit → weakness
Even a 20% drop in Perth prices from their record high would only take the market back to mid-2025 levels, according to Cotality analysis.
uncertain
drop → take → analysis
Peter Esho, an economist and chief executive at 13x, said he believed the big housing markets of Sydney and Melbourne were “close to bottoming”, while the mid-sized capitals were at an earlier stage of the downturn.
asserted
capitals → say → downturn
“The downturn is just part of a normal housing cycle, driven by interest rates, which are having a negative wealth effect,” Esho said.
“They’re really denting sentiment, and real estate is a sentiment asset.”
Esho said he did not believe the price falls would turn “systemic”, which he said would only happen if it became difficult for prospective buyers to borrow, like it did in the US during the global financial crisis, or if unemployment surged.
asserted
unemployment → drive → crisis
Rental pressures have eased slightly, with national vacancy rates rising and rent growth slowing, according to Cotality.
uncertain
growth → ease → Cotality
Rents are still up more than 50% over six years, adding about $245 a week to the median rental rate, fast outpacing wage growth.
asserted
Rents → add → growth
Analysts partly link the rising vacancy rate to changing household dynamics.
asserted
Analysts → link → dynamics
Driven by affordability, more renters are sharing homes or moving in with family, unwinding the pandemic-driven shift toward smaller households with room for a home office.
asserted
renters → drive → office
The Aporia
