SYDNEY, Nov 2 (Reuters) – Australian home prices fell for a seventh month in October, with the downturn proving steeper than any in the past four decades, while the heightened risk of another imminent rate hike added to more pain for a once-booming housing market.
Figures on Monday from property data firm Cotality showed national home prices fell 1.2% in October from September, when they dropped by a downward revised figure of 1.3%. That left values 6.7% below their peak and down 2.8% from a year ago.
Capital-city home values were falling at their fastest in 40 years, the firm 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 interest rates sharply to tame inflation after the COVID-19 pandemic.
Mid-sized capitals led the declines in October, with Brisbane home values falling 2.0% and Perth down 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 have a lot more stock to choose from, they have more leverage and there isn’t the same urgency to buy as there was a year ago when home values were rising rapidly,” said the firm’s research director, Tim Lawless.
“But despite this being a buyer’s market, they are noticeably absent, reflecting low confidence and ongoing serviceability barriers.”
Property sales have slumped, falling 23% from a year earlier and standing 18% below the five-year average. The drop has been most pronounced in Sydney, where transaction volumes are down 30% from a year ago.
Adding to more weakness ahead, the Reserve Bank of Australia is widely expected to raise interest rates a fifth time next Tuesday to 4.85%, a 18-year high, to fight inflation.
Markets imply nearly a 90% probability of a 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.
Most Australian mortgage holders would still be in positive equity if house prices dived 20%, the RBA said.
(Reporting by Stella Qiu; Editing by Clarence Fernandez)
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