National house prices have fallen for a seventh consecutive month, with the speed of the decline in home values tracking at the fastest pace seen over the past 40 years, according to property research group Cotality.
Its latest national Home Value Index (HVI) was down 1.2 per cent in October and is now 6.7 per cent below its March peak, equivalent to a decline of about $63,400 in the value of the median Australian dwelling.
The index shows the median national house price now stands at $884,855.
Cotality head of research Gerard Burg said the speed of decline was tracking faster than any previous downturn over the past 40 years, with capital city values down 8.1 per cent in seven months.
Virtually every suburb across Brisbane, Perth and Adelaide has recorded a drop in values over the past three months as buyers struggle to get loans because of higher interest rates.
It sits alongside investor demand also waning because of the federal government's budget changes to property tax breaks.
"This is really a demand-led downturn," Mr Burg said.
"That's reduced the borrowing capacity of households, but also increased the repayments for people to make on a mortgage, and it's pushed a lot of buyers to the side."
Mr Burg is among many economists anticipating higher rates for longer and further house price falls.
"The previous record was 2017 through 2019, which stood at 8.2 per cent [falls] across the combined capital cities. Now, at the moment, as of October, the downturn that we've seen over the past seven months is 8.1 per cent [falls], so it looks like we're easily going to push past that mark."
The number of home sales has dropped sharply as demand weakens.
Cotality puts the number of home sales over the past three months 23 per cent lower than a year ago and 18 per cent below the previous five-year average.
With fewer buyers, it has become harder to sell homes. Auction clearance rates across the combined capitals are consistently tracking below 50 per cent, while private treaty metrics have also weakened.
The median time on market, at 39 days, is the highest since August 2020, while vendor discounting, at 4.7 per cent, is the largest since May 2019.
Mr Burg said buyers would hold back until the Reserve Bank of Australia indicated a different direction on rates, and that likely would not happen until the latter half of 2027.
"It [the RBA] doesn't necessarily require rates to come down, but [give] the clear signal that that is the direction that they are going to take."
Domain's chief economist Nicola Powell says it could be well into next year before rate cuts are on the agenda.
"We need something to change to improve buyer confidence. And that isn't going to come at least until we have the discussion of a potential rate cut. And that's unlikely to happen until the latter part of 2027."
Harcourts real estate agent and auctioneer Sam Devlin, who sells homes in Brisbane, said over the past six months enquiries at open homes had been down in some instances by 300 per cent.
"That's been brought on since the May budget," he said.
"The government's taxation policies around negative gearing and capital gains tax have certainly affected what is happening there."
Mr Devlin said even buyers looking to upsize were heading to auctions unsure whether they could stump up the cash.
"There would be more interest if there was more confidence in the market that buyers could actually sell the house that they're already in."
Jin Ling at real estate agent Vic Prop sells homes in Melbourne's eastern suburbs. He said enquiries were down and buyers were far more cautious.
"Right now, they don't have the confidence that, if rates go up two or three more times over the next 12 months, whether that's a comfortable position for them," he said.
Mr Ling said it could take years for property values to rise strongly again.
"I think it'll be a three-to-four-year period, where hopefully we can see a level of recovery," Mr Ling said.
In the meantime, some buyers could get better value.
Recent data from Domain showed Melbourne was just $14,000 away from the median house price falling below $1 million.
Cotality's data is modelled differently and already had Melbourne well below that. Its October figures show Melbourne's median dwelling price is $773,027.
"We've seen the upper end of our markets, particularly in Sydney and Melbourne, see price falls for a much longer period of time. Those price falls were happening at the end of 2025," Domain chief economist Nicola Powell said.
Mr Ling said he had already seen greater buyer interest from people living interstate for homes in Melbourne.
He said for all the dire predictions, there was going to be greater value for those looking to buy their first home or wishing to upsize.
"I think that there are incredible buying opportunities out there," he said.
