Home values just fell for a seventh straight month, and this downturn is now the fastest in 40 years. What it means the day before a likely rate rise

Australian home values fell again in October, the seventh month in a row, and the pace of this downturn is now the fastest Cotality has recorded in 40 years. The leaders have changed too: Brisbane and Perth have overtaken Sydney as the fastest-falling capitals. Buyers have more choice and more bargaining power than they've had in years, but many are staying on the sidelines. And all of this lands the day before the Reserve Bank is widely expected to lift rates again. Here's what Cotality's October figures say, and what they mean if you're buying, selling, refinancing or simply keeping an eye on your equity.

The numbers

Cotality's October Home Value Index, released this morning, showed national dwelling values down 1.2% over the month. That's a slightly bigger fall than September's 1.1%, which we covered in our 5 October article, and it takes the downturn into its seventh consecutive month.

The national index is now 6.7% below its March peak. Cotality says that's equivalent to a fall of about $63,400 in the value of the median Australian dwelling.

What stands out this month is the speed. Across the combined capital cities, values are down 8.1% in seven months. Cotality compares that with earlier downturns at the same stage:

In other words, in just seven months the current downturn has almost matched the entire 2017–19 fall, which took far longer to play out. That doesn't mean it will keep falling at the same pace, but it shows how quickly conditions have turned this year.

Where values are falling fastest

For most of this year, Sydney and Melbourne led the falls. That has now changed. The mid-sized capitals, which saw the strongest growth over the past six years, are now falling fastest.

Cotality's research director, Tim Lawless, said: "The mid-sized capitals, where home values recorded extreme growth conditions over the past six years, are now well and truly in a correction." He added that virtually every suburb across Brisbane, Perth and Adelaide has recorded a drop in values over the past three months.

Cotality's main release doesn't list every capital, but its daily index at the end of October had Adelaide down about 1.2% for the month, Melbourne down 0.8% and Canberra down 0.6%, while Darwin (+0.6%) and Hobart (+0.5%) were still rising. Over the year, Adelaide values are still about 3.8% higher on that measure. (Other price indices use different methods. PropTrack, for example, reported a national fall of just 0.3% for October, so it's best not to compare figures from different providers directly.)

Why values are falling

Cotality points to several pressures working together. In Mr Lawless's words: "Affordability and serviceability constraints were the earliest factors weighing on housing demand, with these headwinds amplified by four interest rate hikes, persistently low confidence and ongoing cost-of-living pressures. The Federal Budget has added to the downside pressure since mid-May."

Put simply, higher rates mean lenders will lend less to the same household, and the repayments on any given loan are higher. That has pushed many would-be buyers to the side. Cotality's head of research, Gerard Burg, told the ABC this is "really a demand-led downturn", and said buyers are likely to hold back until the RBA signals a change in direction, which he doesn't expect until the second half of 2027.

A buyer's market, with fewer buyers

The flip side of weaker demand is that conditions have shifted strongly in buyers' favour. Cotality's figures show:

• Fewer sales. Home sales over the past three months were an estimated 23% lower than a year ago and 18% below the five-year average. Sales were down 30% in Sydney and 29% in Brisbane compared with a year earlier.
• Longer selling times. The median time on market is 39 days, the highest since August 2020.
• Bigger discounts. The typical vendor discount is 4.7%, the largest since May 2019.
• More stock. Capital city listings are at their highest level for this time of year since 2019, even though fresh listings coming to market are running almost 18% below average. Homes are simply taking longer to sell.
• Soft auctions. Clearance rates across the combined capitals are consistently tracking below 50%.

"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," Mr Lawless said. "But despite this being a buyer's market, they are noticeably absent, reflecting low confidence and ongoing serviceability barriers."

What about equity?

Falling values sound alarming, but for many owners the picture is less dramatic than the headlines suggest. After years of strong growth, most homeowners in Brisbane, Perth and Adelaide are likely to be sitting on a significant equity buffer. Cotality notes that a 20% fall from Perth's peak would only take values back to around mid-2025 levels.

Owners in Melbourne and Sydney are in a weaker position. Melbourne values are 7.3% lower than five years ago, and Sydney values are 1.5% below October 2021 levels. ACT values are virtually unchanged over five years. The people most exposed are generally those who bought, or borrowed more, near the recent peak.

What it means for you

• Buying? You likely have more room to negotiate than at any time in years: more choice, longer selling times and bigger discounts. But borrowing capacity is what's holding many buyers back. If you have pre-approval, get it rechecked after Tuesday's decision, as a higher rate usually reduces how much you can borrow.
• Selling? Price realistically. With homes taking around 39 days to sell and an average discount of 4.7%, an ambitious asking price can mean a longer campaign. If you're buying before you sell, talk through bridging options and buffers early. Our 23 October article covers some recent lender changes.
• Refinancing? Falling values can push up your loan-to-value ratio (LVR). If you bought or refinanced near the peak, a new valuation may come in lower than you expect. That can affect the rate you're offered, or mean lenders mortgage insurance applies if your LVR goes above 80%. It's worth getting a sense of your position before you apply.
• Staying put? A lower valuation doesn't change your repayments, and you only lock in a loss if you sell. Keep building a buffer in your offset or redraw if you can, especially with another rate rise expected.
• Feeling squeezed? Talk to your lender early. Hardship options exist, and lenders generally have more options if you contact them before you fall behind. Our 30 October article covers what to do.

Tomorrow's rate decision

The Reserve Bank announces its next cash rate decision at 2:00pm Adelaide time (2:30pm AEDT) on Tuesday 3 November. All four major banks expect a rise from 4.60% to 4.85%, and markets are pricing it as the likely outcome, although the Board decides on the day. A rise would add to the pressure on borrowing capacity that's already weighing on prices.

We looked at whether 4.85% might be the peak in our 1 November article, and at what a 0.25% rise would cost on a range of loan sizes in our 29 October article. We'll cover the decision and what it means for borrowers on the day.

Looking further ahead, Cotality expects the housing market to stay subdued through the rest of the year and into 2027, given low confidence and the risk of further rate rises. Forecasts can change quickly, though, particularly if inflation or rates move differently from what markets expect.

Key dates

• Tuesday 3 November 2026, 2:00pm Adelaide time (2:30pm AEDT): RBA cash rate decision and Statement on Monetary Policy.
• Late November (expected around 25 November): ABS monthly inflation figures for October.
• Early December: Cotality's Home Value Index for November.
• Tuesday 8 December 2026: the RBA's last decision for 2026.

Related reading

• Tuesday's rate rise is almost priced in. The bigger question for your mortgage is whether 4.85% is the peak (Sunday 1 November)
• Nearly 1 in 3 mortgage holders are now at risk of stress, and APRA says late repayments are ticking up (Friday 30 October)
• Inflation just hit 4.3%, and all four big banks now expect a rate rise on Melbourne Cup Day (Thursday 29 October)
• Rates are up, but some lenders are quietly changing the rules (Friday 23 October)
• Spring has stalled: homes are taking longer to sell (Thursday 15 October)
• Home values fall for a sixth straight month: what Cotality's September figures mean (Monday 5 October)

Sources: 1. Cotality, "Housing downturn broadens as Brisbane and Perth lead the decline", 2 November 2026 — national Home Value Index −1.2% in October, seventh consecutive fall; 6.7% below March peak, about $63,400; combined capitals −8.1% in seven months (2022–23 −7.0%, 2017–19 −1.2% at the same stage, −8.2% peak to trough); Brisbane −2.0% (−6.1% quarter), Perth −1.7% (−5.7%), Sydney −1.6% (−4.7%); sales −23% on a year ago and −18% on the five-year average, Sydney −30%, Brisbane −29%; 39 days on market (highest since August 2020); 4.7% vendor discount (largest since May 2019); listings highest for the time of year since 2019, new listings almost 18% below average; clearance rates below 50%; equity comparisons; Tim Lawless quotes; outlook subdued into 2027 (https://www.cotality.com/au/insights/articles/housing-downturn-broadens-as-brisbane-and-perth-lead-the-decline). 2. Property Investment Professionals, weekly market read (Cotality daily index at 31 October month-end values) — Adelaide −1.2%, Melbourne −0.8%, Canberra −0.6%, Darwin +0.6%, Hobart +0.5% in October; Adelaide +3.8% over the year; all four major banks expect 4.85%; RBA decision 2:30pm AEDT 3 November (https://propertyinvestmentprofessionals.com.au/market). 3. ABC News, "'Largest property downturn in 40 years' in sight as house prices fall for seventh time", 2 November 2026 — Gerard Burg comments (https://www.abc.net.au/news/2026-11-02/house-prices-fall-in-october-biggest-downturn-40-years-cotality/107325214). 4. realestate.com.au Home Price Report (PropTrack), October 2026, published 2 November 2026 — national −0.3%, referenced only as a different measure (https://www.realestate.com.au/insights/realestate-com-au-home-price-report-october-2026/).

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