Australian House Prices Fall Fastest in Over 40 Years

what happened

Australia's housing downturn sped up in October to its fastest pace in more than four decades, according to property research group Cotality. Its national home value index dropped 1.2% over the month, extending the decline to a seventh consecutive month. The index now sits 6.7% below its March peak, a fall of roughly 63,400 Australian dollars for the median dwelling.

Brisbane and Perth recorded the steepest monthly declines, at 2.0% and 1.7%, while Sydney followed closely at 1.6%. Modelled estimates show home sales over the past three months were 23% below a year earlier. Economists do not rule out further rate increases, with the Reserve Bank of Australia expected to hike for a fifth time at next week's meeting.

why it matters

A cooling housing market under rising rates weakens domestic demand and could weigh on banks that lend heavily to mortgages, while a further tightening by the central bank would add pressure on the outlook.

market impact

Australian banks and AUD: weakening housing market and expected rate hikes create pressure.

• ▼Australian banks pressure down — mortgage demand is falling and credit quality risks are rising
• ↔AUD/USD mixed — an expected rate hike supports the currency, while weaker economic momentum holds it back

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