Key Highlights

  • Kent placed the 2026 downturn below the steepness of the 2018–19 and 2022 slumps, at a time when prices were falling about 0.5% a month.
  • The minutes say prices have since fallen faster than expected and the cumulative decline is likely to be greater than assumed.
  • The RBA has not offered an updated comparison; Kent is scheduled to speak on 18 and 19 October.

In August, Assistant Governor Christopher Kent measured the 2026 housing downturn against two earlier slumps and found it was not yet as steep, but the Reserve Bank's September minutes show the decline has since run faster than expected.

Every downturn invites comparison with the last one. When Christopher Kent, the Reserve Bank of Australia's (RBA) Assistant Governor (Financial Markets), discussed the housing market in a fireside chat in Sydney on 13 August 2026, he reached for two reference points: the price declines of 2018–19 and of 2022.

His assessment was that the current falls had not yet been as steep as either of those episodes.

The comparison was made in a speech titled "The Restrictive Stance of Monetary Policy", delivered at the Reuters NEXT Newsmaker / LSEG Insight Series. It came after three cash rate increases earlier in 2026 and before the Monetary Policy Board's decision on 29 September to lift the cash rate target by a further 25 basis points to 4.60%.

What Kent actually said

Kent's comparison came with a set of supporting observations about the market as at August 2026:

  • National housing prices had been falling about 0.5% a month over the previous three months.
  • There had been four consecutive monthly falls.
  • "Housing prices have declined in Sydney and Melbourne".
  • "tax changes announced in the federal budget appear to have contributed to reduced demand".
  • Scheduled mortgage payments were near their 2024 peak as a share of income.

Taken together, those points described a market that was clearly weakening, with the decline concentrated in the two largest cities, but one that had not yet matched the depth of the earlier slumps he cited.

Why a benchmark is useful

Comparisons with past episodes give policymakers and the public a way to calibrate the present. A decline described in isolation can be hard to interpret. Placed against downturns that households and lenders have already lived through, it becomes easier to judge whether the current move is unusual.

Kent's framing also fitted his broader argument. He said "the three cash rate increases earlier this year are having their intended effects" and that "monetary policy in Australia is somewhat restrictive". Falling housing prices were part of the evidence that higher rates were reaching the economy. By noting that the falls were not yet as steep as in 2018–19 or 2022, he was signalling that the adjustment, while real, remained within the range of past experience.

He also noted that "It takes some time for tighter monetary policy to have its full effect on economic activity and inflation." That caveat matters when reading his comparison: the downturn of mid-2026 was still unfolding when he spoke.

How the picture shifted after August

The qualification that the falls were not yet as steep as past slumps proved significant. By the time of the Board's 28–29 September meeting, the RBA's view of the housing market had moved.

The minutes, published on 13 October, say established housing prices fell faster than expected, and that "the cumulative fall in housing prices is likely to be greater than had been assumed." New housing loan commitments fell sharply, led by investors.

The geographic picture also widened. Kent had referred to declines in Sydney and Melbourne. The Board's statement on 29 September said "housing prices have fallen in most capital cities" and that "new housing loans have declined noticeably".

The RBA's published documents do not say whether the downturn has now reached the depth of 2018–19 or 2022, and no updated comparison was given in the minutes. What they make clear is that the decline has run ahead of the RBA's earlier assumptions.

A different setting for this downturn

Whatever the comparison with earlier slumps, the 2026 decline is taking place against its own particular backdrop.

This downturn is unfolding while interest rates rise. The September increase was the fourth of 2026. Governor Michele Bullock described it with the words: "This is one more."

Inflation is above target. Headline CPI was 4.0% over the year to August 2026 on the monthly measure. Underlying inflation, measured by the trimmed mean, was 3.6% over the year to the June quarter of 2026, compared with the RBA's 2–3% target.

The Board also judged that household balance sheets were in reasonable shape. The minutes note that very few borrowers are in negative equity, and that this is likely to remain the case even if housing prices fell 20%. Arrears are low, loan impairments are around historical lows and fewer than 2% of owner-occupier borrowers have a cash flow shortfall.

The Financial Stability Review, released on 1 October, said in paraphrase that most mortgage holders should cope with harder conditions even if house prices fell sharply, with some pockets of stress.

Household spending is also part of the backdrop. The minutes record that household consumption slowed in the first half of 2026 to a below-trend pace, as the RBA had expected, and the Board's statement described consumer spending as easing gradually. Softer spending and softer housing prices are both consistent with tighter policy reaching households.

And the longer-term supply picture remains tight. Bullock said: "we have a structural under supply of housing."

The faster decline did not stop the Board from raising rates. The minutes show that arguments for holding centred on downside risks to activity, which members judged modest. They also record that "financial stability considerations were not currently constraining the setting of monetary policy."

In the Board's assessment, the bigger risk lay with inflation. Developments "pointed to an increase in the risk of persistently elevated inflation", according to the minutes.

The bottom line

Kent's August comparison placed the 2026 housing downturn below the steepness of the 2018–19 and 2022 slumps, at a time when national prices were falling about 0.5% a month. Since then, the RBA has acknowledged that prices are falling faster than expected and that the cumulative decline is likely to be larger than assumed, without offering an updated comparison with past episodes. Kent is scheduled to give an interview on 18 October and a fireside chat on 19 October, and the next cash rate decision is scheduled for 2.30 pm on 3 November 2026.