Australian home prices fell for a seventh month in October, in a downturn steeper than any in the past four decades. A possible interest rate increase from the Reserve Bank of Australia next Tuesday adds to the pressure on the housing market.
Australian home prices fell 1.2% in October from September, according to figures from property data firm Cotality. September's drop was a downward revised 1.3%. Values now sit 6.7% below their peak and 2.8% lower than a year ago.
Capital cities fall at the fastest pace in 40 years
Capital-city home values were falling at their fastest in 40 years, Cotality said, with prices down 8.1% in just seven months. That surpassed a decline of 7% over the same timeframe in 2022-2023, when the central bank raised rates sharply to tame inflation after the COVID-19 pandemic.
Mid-sized capitals led the October declines. Brisbane home values fell 2.0% and Perth dropped 1.7%, unwinding some of the gains of roughly 50% racked up over the past five years. Sydney prices fell 1.6% in the month, leaving values 1.5% below where they were five years ago.
Buyers stay away as sales slump
Cotality research director Tim Lawless said buyers have more stock to choose from, yet they are absent. According to Lawless: "despite this being a buyer’s market, they are noticeably absent", reflecting low confidence and ongoing serviceability barriers.
Property sales fell 23% from a year earlier and stand 18% below the five-year average. The drop was most pronounced in Sydney, where transaction volumes are down 30% from a year ago.
RBA is widely expected to raise rates again
The Reserve Bank of Australia is widely expected to raise interest rates a fifth time next Tuesday to 4.85%, an 18-year high, to fight inflation. Markets imply nearly a 90% probability of a rate hike, with a 20% chance that interest rates could reach 5.1%.
Policymakers have flagged the housing market as a downside risk to the economy but were sanguine about any financial stability risks from a property downturn. The RBA said most Australian mortgage holders would still be in positive equity if house prices dived 20%.
Source: Investing.com (Reuters)
Trading involves risk.
Risk Disclaimer
