Australian Home Prices Fall 1.2% in October as Markets Eye Rate Rise to 4.85%
Key Facts
Australian home prices fell 1.2% in October from September, when prices declined by a revised 1.3%, according to data reported by Reuters citing Cotality. The monthly decline was the seventh in a row as markets expect the Reserve Bank of Australia to raise its cash rate to 4.85% at its decision scheduled for November 3. The current target is 4.60%, after the bank raised it by 25 basis points on September 29. October’s decline reflects continued pressure on the housing market as inflation remains elevated. The pace of falls also varied across cities, with Brisbane and Perth recording the largest monthly declines among the major cities.
The major-city index fell 8.1% in the seven months through October, exceeding the 7.0% drop in the 2022–2023 cycle over the same period, according to Cotality. In the 2017–2019 cycle, the decline over the comparable period was 1.2%. Nationally, home values are now 6.7% below their March peak, equivalent to a fall of about A$63,400 in the value of the median home. The trend highlights the scale of the correction since the Australian spring, with its severity varying between the national and major-city indexes. The central bank raised rates sharply in the 2022–2023 cycle to curb post-pandemic inflation, according to the comparison cited by Reuters.
Brisbane and Perth led October’s decline, with values falling 2.0% and 1.7%, respectively, while Sydney fell 1.6%. Sydney values are now 1.5% below their October 2021 level, according to Cotality. This coincided with weaker sales activity: estimated home sales in the three months through October fell 23% from the same period a year earlier and were 18% below the previous five-year average. In Sydney, sales activity fell 30% year over year over the same period. The figures indicate that falling prices are occurring alongside a contraction in transactions, rather than in a market where the pace of sales is increasing.
Market indicators point to a widening gap in negotiating power between buyers and sellers. The median time a property spent on the market was 39 days in October, the highest since August 2020, while seller discounts reached 4.7%, the largest since May 2019, according to Cotality. In the September quarter, national home values fell 3.7%, and seller discounts in the major cities reached 4.4%, their highest level in five years, according to the company’s data. National rents also rose 0.5% in the quarter, the slowest quarterly growth since December 2024, while annual growth slowed to 5.5%. These indicators depict a market where values are falling and marketing times and discounts are increasing, while rent growth continues to slow.
National sales fell 23% from a year earlier, leaving them 18% below the five-year average, according to Reuters, citing Cotality; Sydney recorded a 30% annual decline in transaction volumes. Cotality’s head of research said buyers were “clearly absent, reflecting weak confidence and ongoing affordability constraints.” In separate data for September, Cotality estimated that 39,747 homes were sold nationally, down 20.9% from the same month a year earlier. The median time to sell rose to 41 days in September, from 26 days a year earlier. The figures reinforce the picture of weak demand and slower property turnover in the market.
The housing market faces the expected rate decision as annual inflation rose to 4.3% in September from 4.0% in August, according to the Australian Bureau of Statistics. Housing was the largest contributor to annual inflation, with prices rising 5.2% in September. The trimmed mean measure of underlying inflation averaged 3.6% annually, compared with 3.5% in August after seasonal adjustment, while the consumer price index rose 1.3% in the September quarter. When it raised rates in September, the Reserve Bank of Australia said inflation “remains elevated” and that it could raise the rate further if necessary. The bank is scheduled to announce its updated decision on November 3 at 2:30 p.m. Sydney time, with the existing cash rate target before the update at 4.60%.