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Reserve Bank officials have repeatedly set recent home price declines against a much larger rise since the start of the decade, a comparison that explains why they describe the downturn as modest.

Headlines about falling home prices can sound alarming, particularly for recent buyers. But when senior Reserve Bank of Australia (RBA) officials have discussed the housing market in recent weeks, they have consistently placed the falls against a longer backdrop: prices remain roughly 50 per cent above where they were at the start of the decade.

That framing appeared in three separate appearances in September, by the Governor, the Deputy Governor and the Assistant Governor (Economic). Together they offer a clear picture of how the RBA sees the property market right now.

Three officials, one comparison

Governor Michele Bullock, 18 September. In her opening statement to the House of Representatives Standing Committee on Economics, Ms Bullock said: "Housing prices are still around 50 per cent higher than they were in early 2020." She also said housing prices have fallen in most capital cities.

Deputy Governor Andrew Hauser, 8 September. In an interview with ABC 7.30, Mr Hauser noted that house prices were up about 3 per cent over the year and about 50 per cent since the start of the decade.

Assistant Governor (Economic) Sarah Hunter, 22 September. On The Pay Off podcast, Ms Hunter described the recent housing downturn of around 3 per cent as modest, given prices rose about 50 per cent from late 2019.

The figures differ slightly in how they are framed. Mr Hauser's comment referred to the change over a year, while Ms Hunter referred to the size of the recent downturn. The reference points also vary a little: early 2020, the start of the decade and late 2019. But the common thread is the same. Measured against the run-up of recent years, the recent declines are small.

Illustration only: how the arithmetic works

To see why a fall of a few per cent leaves prices well above where they started, consider a simple hypothetical. This is an illustration only, using round numbers; it is not an RBA calculation and does not describe any actual market or property.

  • Suppose a price index stood at 100 in early 2020.
  • A rise of 50 per cent would take it to 150.
  • A subsequent fall of 3 per cent from 150 would take it to 145.5.
  • At 145.5, the index would still be 45.5 per cent above its starting level of 100.

In other words, in this illustration a 3 per cent fall removes only a small part of the gain. The bulk of the earlier rise remains. The same arithmetic holds at any starting level: a 50 per cent rise followed by a 3 per cent fall leaves prices at 1.455 times where they began. That is the logic behind the officials' description of the recent falls as modest.

The illustration also shows why the starting point matters. A buyer who purchased near the top of a market, rather than in early 2020, would experience the same percentage decline very differently. Aggregate comparisons describe the market as a whole, not the position of any particular owner.

What the falls mean for borrowers

Seen through the lens of the RBA's Financial Stability Review, the key question is household resilience. The most direct risk from falling prices is negative equity, where a borrower owes more on the loan than the property is worth.

On that measure, the October 2026 Financial Stability Review (FSR) found "less than 1 per cent of borrowers estimated to owe more on their loan than the value of their property". Ms Bullock told the parliamentary committee: "The share of borrowers in negative equity remains very limited and only a small share are facing severe difficulty with their loan repayments."

The FSR also found that offset and redraw buffers leave "the median borrower able to cover over a year of scheduled mortgage payments at current interest rates from these buffers". Ms Hunter said that just over 40 per cent of households with mortgages are two or more years ahead on their mortgage payments.

The Review's broader assessment was that "Most Australian households with mortgages remain well placed to manage more difficult conditions".

Prices, policy and what to watch

It is worth being clear about what these comments do not mean. The RBA is not setting interest rates to bring house prices down, or to hold them up. Ms Bullock told the committee directly: "Monetary policy does not target housing prices."

The cash rate target, now 4.60 per cent after a 25 basis point increase on 29 September, is aimed at inflation, which the Bank wants back in its 2–3 per cent target range. The August monthly CPI indicator showed headline inflation of 4.0 per cent, while underlying inflation has been about 3.5 per cent for the past six months, according to the Governor.

Ms Hunter also noted that rents move with demand and supply in local markets, not automatically with interest rates, a reminder that housing costs respond to more than the cash rate alone.

For those following the housing market, several upcoming RBA releases may add context:

  • the minutes of the September Monetary Policy Board meeting on 13 October;
  • the next CPI update on 28 October; and
  • the Board's 3 November decision and the accompanying Statement on Monetary Policy.

None of these is a housing report, but each will shape the interest rate backdrop against which the property market moves.

The bottom line

The RBA's senior officials have been consistent: house prices have fallen recently in most capital cities, but they remain roughly 50 per cent above early 2020 levels. Against that backdrop, a decline of around 3 per cent looks modest, and the latest FSR estimates that fewer than 1 per cent of borrowers are in negative equity. The aggregate picture does not capture every household's experience, particularly for recent buyers, but it helps explain the RBA's relatively calm tone. Ms Hunter said she saw no signs of systemic financial distress, though individuals can struggle if their income changes.