Home values across Australia’s combined capital cities have dropped 8.1% in only seven months, according to Cotality’s November Monthly Housing Chart Pack. That is the fastest decline over a comparable stretch in at least four decades.
The fall now sits just 0.1 percentage point short of the largest peak-to-trough drop of that period, an 8.2% decline between October 2017 and May 2019.
“Next month, the current downturn looks set to surpass this fall,” said Cotality head of research Gerard Burg (pictured) in a media release.
Sydney has fallen furthest, with values now 10.1% below their February record high, followed by Perth (8.9%) and Brisbane (8.3%).
“These mid-sized capitals are now experiencing their fastest downturn on record,” Burg said, adding that strong post-COVID growth had stretched affordability in those markets.
Nationally, dwelling values slipped 3.9% over the three months to October and 2.8% over the year. Regional markets have held up better: they are still 3.4% higher over 12 months, while the capitals are down 4.8%.
The downturn comes as the Reserve Bank’s fifth rate rise of 2026 took the cash rate to 4.85%, a level not seen since late 2008. The board was split six votes to three on the decision.
Cotality estimates that monthly repayments on an average owner-occupier mortgage of almost $742,000 have risen by about $600 since January, an increase of 14%, while a median-income household’s borrowing capacity has fallen by roughly $88,000.
In September, new owner-occupier variable loans averaged 6.22%. Fixed rates of three years or less now sit above that, at 6.36%, whereas in 2025 they were cheaper than variable loans.
“Rates are likely to move higher again once the previous cash rate hikes are fully passed on,” Cotality said.
Over the three months to October, homes took a median 41 days to sell nationally, up from 24 days a year earlier. The median vendor discount widened to 4.5%, the largest since mid-2019, with Brisbane (5.6%) and Perth (5.3%) recording the biggest discounts.
The combined capitals’ weekly clearance rate fell to 40.7% in the week ending 1 November, its lowest point since mid-April 2020.
Burg said supply was starting to adjust. Melbourne’s stock for sale sat 5.3% below its five-year average in the four weeks to 8 November, while Adelaide and Brisbane were about 25% above theirs. Melbourne values are now falling at the slowest pace of the major capitals.
“A recovery in housing market conditions is unlikely until buyers have the confidence and financial capacity to return to the market,” he said.
Burg added that Reserve Bank rate cuts would likely be needed, but currently appear unlikely before the second half of 2027.
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