Canberra property price declines eased marginally in October, fuelling hope for a sunnier summer market despite the threat of more interest rate rises.

The CoreLogic Hedonic Home Value Index, released on Tuesday, shows the rate of decline slowed in Canberra last month with property prices dropping by 1%.

This compares favourably with recent months, which saw Canberra property prices dip by 1.6% in September, 1.7% in August and 1.1% in July.

House values sustained a greater drop of 1.1%, compared to units and apartments, which fell by 0.7% for the month.

The median dwelling price in Canberra is now $876,567.

MARQ partner and licensed agent Craig Chapman said despite the public rhetoric and concern about interest rate rises, the Canberra market was going through a cyclical adjustment after strong growth.

“At the end of the day, homes that are well presented, well positioned and well priced are selling, but there is no doubt the market is slower than it has been,” Craig said.

“Everyone is concerned about cost of living and are trying to reduce stress on their household coffers. That, along with the impact of the interest rate rises, is playing a role in the slowdown of the market.

“But, the good news is that traditionally the market resets in the new year so that may bring some additional activity.”

The data comes as the Reserve Bank of Australia this week increased interest rates for the seventh consecutive month, and warned of further hikes if inflation continues its upward trajectory.

The latest action lifted interest rates by 0.25%, taking the cash rate to 2.85% – the highest since April 2013.

The CoreLogic index shows the rate of rent increases slowed again in October, with a 5.7% rise in rents raised for houses in the past year and a 6.7% increase to units and apartments. The rental yield is now at 4%, slightly up on the national rate of 3.7%.

“We are seeing a lot of movement, in particular re-letting early, which I think is due to inflationary pressure hurting those who don’t earn as much. We have seen people moving out of four bedroom rentals and reassessing their situation to move into a three bedroom rental,” Craig said.

Craig said both buyers and sellers needed to be well versed in both their lifestyle requirements as well as local market conditions to make the best property decisions in the next year to 18 months.

This includes honing knowledge about the sort of home you want to buy including the category, product and price range.

“Sellers still have a couple of weeks to go to get their homes ready and on the market for summer with you prepared, a campaign and sold before Christmas,” he said.

“If your plans are to move and be settled before Christmas then you really need to be thinking about having a serious conversation with your agent inside of the next couple of weeks, otherwise you’ve left your run a little late.

“These decisions should be driven by your personal circumstances and your lifestyle, not solely by what the market says. That might mean downsizing your big family home to put a bit into superannuation and get a more modest property to free up some cash. There are still lifestyle forces that people should be listening to, as well as the market.”

CoreLogic Research Director Tim Lawless said nationally, it was too soon to claim that the worst of the property downswing was over.

“Despite the easing in the pace of decline, with Australian borrowers facing the double whammy of further interest rate hikes along with persistently high and rising inflation, there is a genuine risk we could see the rate of decline re-accelerate as interest rates rise further and household balance sheets become more thinly stretched,” he said.

“To-date, the housing downturn has remained orderly, at least in the context of the significant upswing in values. This is supported by a below-average flow of new listings that is keeping overall inventory levels contained.

“There’s also tight labour market conditions, an accrual of borrower savings and a larger than normal cohort of fixed interest rate borrowers, who have so far been insulated from the rapid rise in interest rates.”

RBA Governor Philip Lowe did not rule out further interest rate rises, saying the Board was closely monitoring rising inflation, which is expected to peak at around 8% later this year.

“The Board recognises that monetary policy operates with a lag and that the full effect of the increase in interest rates is yet to be felt in mortgage payments,” he said. “Higher interest rates and higher inflation are putting pressure on the budgets of many households.

“The size and timing of future interest rate increases will continue to be determined by the incoming data and the Board’s assessment of the outlook for inflation and the labour market.”