- Australia's home values fell another 1.2% in October
- It marks the seventh straight month of decline which is now the fastest seen in the past 40 years
- Brisbane and Perth led the monthly value falls in October
Home values fell another 1.2% in October, the seventh consecutive month of decline, knocking more than $63,000 off the price of the median Australian home.
Nationally, home values are now 6.7% below their March peak, with the speed of decline the fastest seen in the past 40 years.
Cotality's latest figures show Brisbane and Perth have overtaken Sydney with the fastest rates of monthly decline, down 2% and 1.7%, respectively, in October.
"Virtually every suburb across Brisbane, Perth, and Adelaide has recorded a drop in values over the past three months," Mr Lawless said.
However, given the magnitude of the upswing prior to the downturn, most homeowners in the mid-sized cities are likely to be sitting on a significant equity buffer.
Even a 20% drop in Perth values from their record high would take the market back to levels recorded around mid-2025.
But homeowners in Sydney and Melbourne aren't in as strong a position.
Melbourne home values are now 7.3% lower than they were five years ago, while Sydney values are down 1.5% over the same period.
ACT home values are virtually unchanged over the past five years.
Home sales continue to plunge
The number of home sales also continued to drop sharply as demand has weakened.
Modelled estimates put the number of sales over the last three months about 23% lower than a year ago.
Sydney and Brisbane have seen the biggest decline in sales activity, down 30% and 29% respectively compared to a year ago.
The median time on the market, at 39 days nationally, is the highest since August 2020 during the COVID plunge.
Vendor price discounting, at 4.7%, is also at its highest level since May 2019.
But despite it being a buyers' market, Mr Lawless said they are "noticeably absent", reflecting low confidence and ongoing loan serviceability barriers.
See also: What is home loan serviceability and how is it calculated?
Rental vacancy rates 'loosen'
Rental markets also continued to ease through spring, with the national vacancy rate rising to 2.3% and October marking the highest national vacancy rate since January 2022.
Vacancy rates were higher than a year ago across every capital city except Darwin which also recorded by far the strongest rental growth, up more than 11% across both houses and units.
Alongside higher vacancy rates across most markets, the pace of rental growth is also easing.
The 0.9% seasonally adjusted rise in national rents over the past three months was the lowest rate since January 2025.
Mr Lawless said this was also likely to be related to demand-side factors.
"Renters are likely to be approaching a ceiling on their capacity to pay more following a 52% surge in rents over the past six years, which added around $245 a week to the median rental rate nationally," he said.
"A slower rate of net overseas migration is another factor that has probably helped to take some heat out of rental demand."
Rental yields hit 11-year high but don't cover costs
But although rental growth is easing, rents continue to rise against a backdrop of falling home values.
This has seen gross rental yields consistently trending higher, with the national figure of 3.77% at its highest point since May 2015.
But Mr Lawless said yields are still nowhere near the levels needed to deliver a neutral or positive cash flow for landlords.
"High holding costs go well beyond investor mortgage rates that are now close to 7%," he said.
"Insurance, strata fees, taxes, and maintenance costs have all risen substantially over recent years, making these costs harder to absorb for investors in established properties who will no longer have the same negative gearing benefits from July next year."
See also: What will changes to negative gearing mean?
What's ahead?
Housing market conditions are expected to remain under downward pressure over the coming months and into next year, with the latest inflation data suggesting further interest rate increases.
Higher interest rates are likely to further constrain housing demand, according to Mr Lawless.
"Another rate hike would mean borrowing capacity has dropped by around 11.5%, or more than $105,000, through the rate-hiking cycle to date," he said.
That more than offsets the approximate $63,400 decline in the national median dwelling value since the March peak.
Added to that are signs the labour market is also softening, undermining household confidence and income growth.
However, despite the growing list of demand-side headwinds, Mr Lawless said there are factors that should help contain the downturn.
Chief among these is the persistently low levels of newly built housing while population growth has slowed but remains positive at a time when new supply remains insufficient.
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