Key facts
- Combined values across state and territory capital cities fell 1.4% over the month, Cotality data showed.
- Capital city home values were down 8.1% since March, Cotality research director Tim Lawless said.
- Brisbane and Perth led October's declines, with virtually every suburb in Brisbane, Perth and Adelaide down over three months, Lawless said.
- Morgan Stanley forecast peak-to-trough Australian property price drops of up to 15%.
- National vacancy rates rose and rent growth slowed, though rents were still up more than 50% over six years, per Cotality.
Australian home values fell for a seventh consecutive month, with combined values across state and territory capital cities down 1.4% over the month, according to Cotality data. Cotality research director Tim Lawless said capital city home values were down 8.1% since March and that the mid-sized capitals, where values recorded extreme growth over the past six years, were now well and truly in a correction.
Cotality data showed the center of the downturn shifting away from Sydney and Melbourne toward mid-sized state capitals, with Brisbane and Perth leading October's declines. Lawless said virtually every suburb across Brisbane, Perth and Adelaide recorded a drop in value over the past three 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. 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%.
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. He said the pace of decline at four-decade highs largely reflected how strong the property market had been over the period.
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. Esho said the downturn was part of a normal housing cycle driven by interest rates and that he did not believe the price falls would turn systemic.
Rental pressures have eased slightly, with national vacancy rates rising and rent growth slowing, according to Cotality. Rents are still up more than 50% over six years, adding about $245 a week to the median rental rate.