Australian home values have fallen for a seventh consecutive month, dropping 1.2 per cent in October to sit 6.7 per cent below their March peak, according to property research group Cotality. The decline equates to an approximate $63,400 drop in the value of the median Australian dwelling, which now stands at $884,855.
Seven Consecutive Months of Decline Across Capital Cities
The speed of the current property downturn is tracking faster than any previous period over the past 40 years. Cotality head of research Gerard Burg stated that capital city values are down 8.1 per cent in seven months. This outpaces the previous 40-year record set between 2017 and 2019, when combined capital city values fell 8.2 per cent.
The centre of the market correction has shifted away from Sydney and Melbourne toward mid-sized state capitals. Cotality research director Tim Lawless noted that virtually every suburb across Brisbane, Perth, and Adelaide recorded a drop in value over the three months leading into October. Brisbane’s median house value fell 2 per cent in October alone, making it the weakest market nationally with a 6.2 per cent drop over the past three months.
Interest Rates and Tax Changes Squeeze Borrower Demand
Higher mortgage rates and federal budget changes to property tax breaks have severely restricted household borrowing capacity. Gerard Burg described the situation as a demand-led downturn driven by four interest rate hikes through the year, with a fifth widely anticipated as the Reserve Bank of Australia weighs its next decision. Investor demand has simultaneously waned following federal government budget changes to property tax breaks.
Real estate agents report a stark drop in transactional activity on the ground. Cotality data indicates that combined capital city auction clearance rates have consistently tracked below 50 per cent.
Median Times on Market Stretch as Vendor Discounting Grows
Sellers are adjusting expectations as properties sit unsold for longer periods. The median time on market reached 39 days, marking the slowest sales pace recorded since August 2020. At the same time, vendor discounting climbed to 4.7 per cent, representing the largest average price discount required to secure a sale since May 2019.
Market tier dynamics have altered the availability of properties priced above $1 million. In April, five capital cities held median house prices above $1 million, including Sydney, Melbourne, Brisbane, Perth, and Adelaide. By October, only Sydney ($1.44 million) and Brisbane ($1.1 million) remained above that threshold.
Rental Vacancy Rates Climb Toward Decade-Long Averages
The housing market slowdown has coincided with easing conditions in the residential rental sector. Cotality data shows the national rental vacancy rate rose to 2.3 per cent, sitting just below the decade-long average of 2.4 per cent and reaching its highest point since January 2022. Vacancy rates climbed higher compared to the previous year across every capital city except Darwin.
Analysts attribute the rising vacancy rate partly to shifting household compositions, as affordability pressures prompt tenants to share accommodations or move in with family members. Despite the recent softening in vacancy metrics, national rents remain more than 50 per cent higher than they were six years ago, adding roughly $245 a week to the median rental rate and continuing to outpace wage growth.
Economist Forecasts for Rate Cuts and Future Property Values
Industry analysts expect property values to fall further before finding a definitive floor. Domain chief economist Nicola Powell stated that a 10 per cent cumulative drop in prices is entirely possible, noting that rate cuts are unlikely to enter the policy agenda until the latter half of 2027. Gerard Burg similarly argued that market recovery will require a clear signal from the Reserve Bank that the interest rate cycle has reversed direction.
Contrasting views exist regarding the depth of the correction in larger markets. Peter Esho, economist and chief executive at 13x, said he believes Sydney and Melbourne are close to bottoming out, describing the downturn as a normal part of the housing cycle driven by the negative wealth effect of interest rates. Meanwhile, Morgan Stanley economists have forecast peak-to-trough national property price drops of up to 15 per cent.
Frequently Asked Questions on Australian Property Market Trends
What is the current median national house price in Australia?
Cotality data puts the median national dwelling price at $884,855 as of October, following a 6.7 per cent decline from the market peak in March.
How do current property decline speeds compare to historical downturns?
Capital city values fell by 8.1 per cent over the first seven months of the downturn, tracking faster than any previous 40-year market contraction.
When are economists predicting potential interest rate cuts?
Domain chief economist Nicola Powell and Cotality researchers estimate that discussions around rate cuts are unlikely to emerge until the latter part of 2027.
Which capital cities are experiencing the sharpest recent price falls?
Mid-sized capital cities are leading the recent declines, with Brisbane recording a 6.2 per cent drop over the three months prior to October.
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