Full Breakdown
Australian Home Prices Slip for Sixth Month, Signaling Deepening Downturn
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Recent Market Decline
On October 1, property analytics firm Cotality reported that national home prices fell 1.1 % in September versus August, extending a six-month streak of declines. The drop leaves prices 5.2 % below their March peak and essentially flat year-over-year. Major cities posted the steepest falls: Sydney down 1.4 % (now nearly 9 % below its February high) and Brisbane down 1.5 %, with median values in Brisbane slipping to A$1.05 million, a loss of A$59,000 since May. Melbourne eased 0.7 %, extending losses to more than 7 % from the November 2025 peak. Smaller capitals—Adelaide and Perth—each slid over 1 % after years of 50-70 % gains.
Underlying Factors
The slowdown follows the Reserve Bank of Australia's (RBA) fourth interest-rate rise this year, taking the cash rate to a 15-year high of 4.6 % to combat stubborn inflation. The RBA warned that even a 20 % price fall would affect only 5 % of borrowers, but it signaled readiness to raise rates further if needed. Analysts link the current slump to the combination of persistent high rates, recent government removal of tax breaks for new property investors, and a chronic supply shortage that previously amplified price surges. Migration-driven demand that had driven a decade-long 60 % rise in residential stock now faces tighter financing conditions.
Economic Impact
Cotality’s data show transaction volumes down 19 % over the past three months compared with a year earlier, indicating buyers remain on the sidelines. Reuters estimates that a prolonged downturn could shave up to A$5.6 billion from annual revenue across real-estate services, trades, and construction. UBS chief economist George Tharenou warned that the current decline is approaching the sharpest on record and could culminate in a 10 % peak-to-trough fall, the largest since records began in 1980.
Official Responses
The RBA downplayed immediate systemic risk, emphasizing that default exposure remains limited despite falling prices. UBS projected further declines, expecting dwelling prices to keep falling for at least a year. Shane Oliver, chief economist at AMP, cautioned that the slump will weigh on growth but is not yet sufficient to prompt the RBA to cut rates while inflation stays high.
Verbatim Quotes
- “The home price slump will weigh on economic growth, but as we saw this week it's not significant enough yet for the RBA to shift gears to cutting rates given high inflation,” — Shane Oliver, chief economist at AMP