Australian home values have dropped for a seventh consecutive month, with prices in the capital cities now falling at the fastest pace in 40 years as rising mortgage rates scare off buyers.

Cotality data shows the centre of the downturn is also shifting away from Sydney and Melbourne towards the mid-sized state capital cities, with Brisbane and Perth leading October’s declines.

Combined values across the state and territory capital cities fell 1.4% over the month.

Cotality’s research director, Tim Lawless, said the downturn was now broad-based, with capital city home values down 8.1% since March.

“The mid-sized capitals, where home values recorded extreme growth conditions over the past six years, are now well and truly in a correction,” Lawless said.

“Virtually every suburb across Brisbane, Perth and Adelaide has recorded a drop in value over the past three months.”

Prices table

The property market has been weighed down by four interest rate hikes this year, with a fifth widely expected when the…