Australia's Biggest Price Fall Ever: Which City Will Break First?

Australian Capital-City House Prices

Domain’s house-price measure recorded a 4.7% fall across Australia’s combined capital cities in the September quarter, described by the presenter as its largest quarterly decline on record. All eight capitals fell together for the first time in 15 years.

The presenter cautions that Domain’s figure covers houses, not units, and that other providers may report different numbers. The exact figure should be treated cautiously, while the broad direction is notable.

The presenter’s central argument is that simultaneous falls point to shared pressures—credit availability, lending rules and interest rates—rather than isolated local factors. Because property demand depends heavily on what buyers can borrow, higher repayments and bank serviceability tests reduce purchasing power. If buyers’ approved budgets no longer match sellers’ expectations, sellers must either lower their prices or wait. Rising listings also give buyers more choice and negotiating power.

Market Figures Cited

• Perth: House prices fell 7.4% in the September quarter, the sharpest decline among the capitals in Domain’s data. On an illustrative $800,000 house, that equates to about $59,000.
• Brisbane: Fell 5.4%, or about $43,000 on an $800,000 house.
• Sydney: Fell 4.7%, matching the combined-capitals figure.
• Listings and selling times (CoreLogic data dated October 15):
  • Perth listings were up 64% year over year; median selling time rose from 11 to 26 days.
  • Brisbane listings were up 60%; selling time rose from 17 to 38 days.

The presenter says former boom markets may be more exposed because prices and seller expectations rose rapidly while buyers stretched their borrowing capacity. Perth’s reliance on commodities is an additional risk if relevant commodity markets weaken.

Interest Rates, Credit and Household Stress

The presenter says the RBA raised the cash rate to 4.6% on September 29, near the end of the quarter, so that decision alone cannot explain the quarter’s entire decline. The presenter also speculates that another increase might follow around Cup Day; this is presented as a possibility, not a confirmed policy decision.

The RBA’s October Financial Stability Review is cited as finding arrears low overall. The presenter argues that prices can fall without widespread defaults: reduced borrowing capacity can lower the price the next buyer can pay even when owners are still meeting repayments.

Low arrears may mean fewer forced sales and a slower market adjustment. However, the presenter cautions that owners’ savings buffers can erode and some investors may eventually sell if they must keep covering property costs.

Perth Versus Brisbane: Presenter’s Assessment

The presenter identifies Perth as the city to watch most closely, based on three warning signs:

1. Its 7.4% quarterly fall was sharper than Brisbane’s.
2. Listings rose slightly faster—64%, compared with Brisbane’s 60%.
3. Selling time more than doubled, from 11 to 26 days, from a faster starting point.

Brisbane’s 38-day selling time is acknowledged as a significant warning sign, and the presenter says Brisbane could ultimately perform worse. The Perth view is an assessment of current indicators, not a certainty.

Framework and Signals to Monitor

The presenter’s market-monitoring approach is to consider several measures together:

• Completed sales and prices: What buyers with actual finance approvals have recently paid.
• Listings: How much housing supply is competing for buyers.
• Selling times: Whether sellers are having to wait longer and may be losing pricing power.
• Credit conditions: How borrowing costs and serviceability rules affect buyers’ budgets.

The presenter says the Perth outlook would become less concerning if listings stop rising, homes sell faster, and quarterly price falls moderate. A smaller fall than 7.4% would indicate easing pressure, though the presenter says this alone would not establish that the market had bottomed. Continued listing growth, slower sales and larger price falls would increase concern.

Practical Cautions and Suggestions

• Owners in Perth or Brisbane are advised to know their repayments and financial buffer and to stress-test their budgets. The presenter suggests testing a mortgage rate 0.25 percentage points above the current rate, then 0.5 points above—for example, 7%, 7.25% and 7.5%.
• The presenter cautions against taking on heavy leverage, especially when finances are already tight.
• Owners who may need to sell within a year are advised to use recent nearby completed sales and selling times as a realistic starting point for pricing.
• Buyers are told they have more choice and time than a year earlier, but should obtain finance approval and set bids according to what they can comfortably repay.
• Investors are advised to check whether rent covers repayments and holding costs at current rates, and to assess how long they can sustain any monthly shortfall.

Assets and Instruments Mentioned

• Residential houses in Australia’s capital cities, particularly Perth, Brisbane and Sydney
• Property listings, mortgages and credit
• Commodities as an economic exposure relevant to Western Australia and Perth
• No company tickers, ETFs, bonds or cryptocurrencies are discussed.

Disclosures and Sources

The presenter says they are not a financial adviser, notes that one quarter of data cannot identify a market bottom, and acknowledges that their view could be early or wrong. The presenter also discloses being in the process of buying another rental property and says they discuss portfolio management in more detail with TIA members.

Presenter and sources: The presenter is not named in the subtitles; the video is from The Investor Accelerator. Data sources cited are Domain (house prices; report released October 22), CoreLogic (listings and selling times; data dated October 15), and the RBA’s October Financial Stability Review.