Australia House Prices Fall at Fastest Pace in 40 Years

SYDNEY, Australia, November 2, 2026 — Australian house prices fell for a seventh consecutive month in October, with capital-city home values declining at their fastest pace in 40 years as rising interest rates and weakening buyer confidence deepen the property market downturn.

According to the latest Cotality Home Value Index, national dwelling values dropped 1.2% in October 2026, taking the total decline since March to 6.7%. The downturn has wiped approximately A$63,400 from the median Australian dwelling value, which now stands at A$884,855.

Combined capital-city home values fell 1.4% during October and have dropped 8.1% in seven months. The latest figures come ahead of the Reserve Bank of Australia’s November 3 interest rate decision, with markets anticipating another increase in the cash rate from 4.60% to 4.85%.

Australia House Prices October 2026: Brisbane, Perth and Sydney Lead Falls

The housing downturn has spread across most Australian capital cities, although the sharpest October declines were recorded in Brisbane, Perth and Sydney.

Brisbane home prices fell 2.0% during October, followed by Perth at 1.7% and Sydney at 1.6%. Melbourne recorded a smaller decline of 0.8%, while Hobart and Darwin were the only capital cities to register monthly increases.

Brisbane and Perth experienced some of Australia’s strongest property price growth over the previous five years. Despite the recent declines, their median dwelling values remain substantially higher than five years ago.

Sydney’s housing market has undergone a more prolonged correction, with its median dwelling value now more than 10% below its February 2026 peak.

Why Australian House Prices Are Falling So Quickly

Higher mortgage repayments, reduced borrowing capacity and concerns about the economic outlook are contributing to falling demand across Australia’s housing market.

The latest Cotality figures show that combined capital-city property values have declined 8.1% in just seven months, compared with a 7.0% decline over an equivalent period during the 2022–2023 downturn.

The current correction is approaching the 8.2% peak-to-trough decline recorded between 2017 and 2019, although it has not yet exceeded that earlier downturn in total magnitude.

According to ABC News, Cotality head of research Gerard Burg described the downturn as being driven by weaker buyer demand as higher borrowing costs make purchasing property increasingly difficult.

Property sales over the past three months were 23% lower than a year earlier and 18% below the five-year average.

Homes are also taking longer to sell. The median time on the market has reached 39 days, its highest level since August 2020, while sellers are accepting average discounts of 4.7%.

The latest figures indicate that more properties are remaining unsold as prospective buyers wait for greater certainty about interest rates and future housing prices.

RBA Interest Rate Decision November 3: Will Mortgage Rates Rise Again?

The Reserve Bank of Australia is scheduled to announce its next monetary policy decision on Tuesday, November 3, 2026, at 2:30 p.m. Australian Eastern Daylight Time.

Financial markets expect another 0.25-percentage-point interest rate increase, which would lift Australia’s cash rate from 4.60% to 4.85%, its highest level in approximately 18 years.

However, the anticipated increase remains a forecast, and the RBA has not announced its November decision as of November 2.

The growing expectation of another increase follows Australia’s September inflation figures, which showed annual consumer prices rising 4.3%.

As detailed in our earlier report on Australia’s 4.3% inflation rate and the possibility of another RBA interest rate hike, higher housing, electricity and petrol costs have added pressure to household budgets.

If the RBA raises the cash rate again and lenders pass the increase through to borrowers, homeowners with variable-rate mortgages could face higher monthly repayments.

Rising mortgage costs also reduce how much prospective buyers can borrow, adding pressure to property prices even when more homes become available.

The official decision and monetary policy announcements can be followed through the Reserve Bank of Australia.

Could Australian House Prices Fall Another 10% to 15%?

Economists expect further weakness in the Australian property market if borrowing costs remain elevated and buyer confidence fails to recover.

Domain chief economist Nicola Powell has suggested a decline of around 10% from the market’s peak is possible, while AMP chief economist Shane Oliver has warned the peak-to-trough fall could reach approximately 15%.

These projections are not confirmed outcomes and depend on the direction of interest rates, employment conditions and the broader economy.

For first-home buyers, falling property values may create more opportunities to negotiate, particularly in Brisbane, Perth and Sydney. However, high mortgage rates continue to offset some of the affordability benefits of lower purchase prices.

Households are also dealing with wider cost-of-living pressures, including rising everyday expenses. Similar concerns were examined in our coverage of Australian grocery prices and household affordability.

The latest housing figures underline the challenge facing the RBA: persistent inflation is increasing pressure for higher interest rates, while declining property values and weaker borrowing demand are raising concerns about the economy.

For Australian homeowners and prospective buyers, the November 3 RBA decision will be the next major development shaping the outlook for house prices, mortgage repayments and the housing market into 2027.

Data sources: Cotality Home Value Index, ABC News, Reuters and Reserve Bank of Australia.