Goldman Sachs Reportedly Tips a Fifth RBA Hike as Morgan Stanley Warns of 15% Home Price Fall
Two of the biggest calls on the Australian economy landed on the same day, and both point in the same direction: higher rates and lower house prices. The Inference reports that Goldman Sachs has switched its call and now expects a fifth interest rate rise this year, taking the cash rate to 4.85% on November 3. On the same day, AAP reported that Morgan Stanley now expects national home values to fall 10 to 15 per cent from their peak, a fall the bank's client note says would be Australia's largest nominal housing downturn in more than 40 years.
Both calls are reactions to the same event: RBA Deputy Governor Andrew Hauser telling a Sydney conference on Wednesday that the inflation outlook looks "materially worse" than the bank's August forecasts.
For homeowners, the two calls combine into a single uncomfortable question: what if rates keep rising while your property keeps falling in value? Here is what was actually said, where the forecasts stand, and what it means for you.
What Hauser said on Wednesday
On Wednesday 21 October 2026, Hauser gave a fireside chat at Citi's Australia & New Zealand Investment Conference in Sydney. The RBA has published the full transcript, and his message was blunt: "The inflation outlook looks materially worse than we projected in the August report."
He said that in August the bank had identified three upside risks to inflation, and that by September it judged all three had crystallised: a prolonged Middle East crisis, the AI and tech boom, and weaker domestic supply capacity. On oil, he said: "On the Middle East, oil prices are even higher, about a third higher than we assumed in the August projection." He added: "Oil was back over $100, no end in sight to the war."
Hauser also gave a striking snapshot of how businesses are thinking. Pointing to the RBA's joint survey with Macquarie University, he said an increasing share of businesses are thinking "maybe three to three and a half per cent is the new normal" for inflation, adding "that is the central banker's nightmare."
On rates, he reminded the audience that "We were the first G20 central bank, as you know, to raise rates this year... we raised them three times in February, March, and May," followed by the September hike that took the cash rate to 4.60%. He also noted that "The Board was unanimous in voting to raise rates, and it said importantly that it stood ready to do more if needed."
Governor Michele Bullock struck the same note after the September decision: "The Board will increase interest rates again if that's what's needed to get inflation down."
Goldman Sachs flips its call to a November hike
The Inference reports that Goldman Sachs "switched its call the same day and now expects a fifth rise, to 4.85%, on November 3". The "same day" is Wednesday 21 October, immediately after Hauser's remarks. The Inference also reports that "UBS expects one too", though no UBS-owned public page carrying a November hike call has been found.
These are reported bank-research calls, not bank-published forecasts: Goldman's notes are client-gated and the call is carried strictly as The Inference's reporting. Still, the market pricing moved sharply in the same direction. Finimize reports that markets are pricing about a 40% chance the cash rate rises from 4.60% to 4.85% in November, up from roughly 30% earlier in the week. Later the same day, EconoTimes reported, citing Reuters, that traders put the probability of a November increase at about 50%, up from 30% at the start of the week. We covered the full odds repricing, including how odds briefly fell to 9% after the jobs figures, in yesterday's story on the November hike odds.
A fifth hike would take the cash rate to 4.85%, its highest level since 2008, according to ANZ Research. ANZ's own published call, from a note on 29 September, remains: "We expect the RBA to raise the cash rate in September and November, taking it to 4.85%, its highest level since 2008. This will likely weigh on household spending growth over the near term." That note pre-dates Hauser's remarks, and the September leg was delivered as ANZ expected.
Morgan Stanley's 15% warning for home values
The house-price call is the more dramatic of the two. The Inference reports that a Morgan Stanley team led by economist Chris Read "now expects national home values to fall 10-15% from their March peak, bottoming in the second half of 2027: the deepest nominal housing downturn in more than 40 years."
AAP's wire piece quotes the Morgan Stanley client note directly: "As such, we now expect national house prices to fall 10-15 per cent from their peak, with a trough in the second half of 2027," and: "This would be Australia's largest nominal housing downturn in over 40 years." The Morgan Stanley note itself is not publicly accessible, so the figures are carried as reported by AAP and The Inference, not as verified Morgan Stanley fact.
The Inference describes the new call as roughly double the 5-10% fall the bank forecast after the May budget, and frames that doubling in its own words, so treat the "roughly double" as The Inference's description rather than an established fact. AAP reports that Morgan Stanley's team was among the first to predict the downturn could reach 10 per cent following the May budget's curbs to negative gearing and the capital gains tax discount, and that the bank estimated those budget tax changes would account for about five per cent of the expected 10-15 per cent peak-to-trough fall.
There is an important split inside the call. The Inference estimates, in its own comparison table, that Morgan Stanley's numbers land at about 10% if the RBA holds rates where they are, and toward 15% if it keeps tightening. That estimate framing matters: AAP does not carry the explicit split, quoting the note only to say "Interest rates remain the key sensitivity of the depth of the downturn from here."
For context, CommBank economists expect national prices to fall around 9% from peak to trough this cycle, with Sydney down around 13% and Melbourne around 12%. AMP's base case is around 10% nationally and 11% for the capital cities, and Dr Shane Oliver says a 20%-plus crash is "unlikely" without much higher unemployment causing forced sales. What has already happened: Cotality's Home Value Index shows national values 5.2% below their March 2026 record high after six straight months of falls, with Sydney 8.6% below its February peak.
Where the banks sit on November
Not everyone is on the hike train. CBA's economics team is still forecasting a hold in November at 4.60%, though chief economist Luke Yeaman says the risks of further increases are building. NAB's base case is also a November hold, with a follow-up hike to 4.85% framed only as a risk. Both of those calls pre-date Hauser's Wednesday remarks.
That leaves the field split: Goldman Sachs and UBS reported as expecting a hike, ANZ's published call still tipping 4.85% in November, and CBA and NAB still at hold. The two pieces of data that could settle the debate arrive soon.
The countdown: CPI on Wednesday, decision on Cup Day
The September-quarter CPI lands on Wednesday 28 October 2026 at 11:30am AEDT, six days before the decision. The RBA board's decision is announced on Tuesday 3 November at 2:30pm AEDT, and EconoTimes reports the board meets over November 2-3. Note the date: 3 November is Melbourne Cup Day, a public holiday in Victoria.
Finimize also reports market forecasts of headline inflation near 4.0% and core inflation around 3.5%, still above the RBA's 2 to 3% target range, but those are Finimize's stated forecasts rather than official figures. The ABS numbers on the 28th are the real checkpoint. For the full lead-up and what to watch, see our November 3 rate watch preview.
What this means for homeowners
Nobody should mistake these for facts. Bank forecasts are revised constantly, and these particular calls arrived via press and client notes rather than published research. But the direction of travel is consistent: the RBA says inflation risks have crystallised, markets are pricing a real chance of a fifth hike, and the housing downturn is being forecast as the deepest in over 40 years.
If you are on a variable mortgage, another 25 basis point rise would push repayments higher still, on top of four hikes this year that have already taken the cash rate from 3.60% to 4.60%. If you are thinking of fixing, the split in bank views is a reminder that the market itself does not know what happens next. And if you are buying, Cotality's data shows values are already 5.2% below the March record nationally, with sales volumes 19.1% below a year ago, so the downturn Morgan Stanley is forecasting is already well under way.
Frequently Asked Questions
What did Goldman Sachs say about the November RBA decision?
The Inference reports that Goldman Sachs switched its call on 21 October and now expects a fifth rate rise this year, taking the cash rate to 4.85% on November 3. No Goldman Sachs-owned public page carries the call; it is reported by The Inference as bank research commentary, not stated by Goldman Sachs itself.
What did Morgan Stanley forecast for Australian house prices?
AAP and The Inference report that Morgan Stanley now expects national home values to fall 10 to 15 per cent from their peak, bottoming in the second half of 2027, which the bank's note describes as Australia's largest nominal housing downturn in more than 40 years. The Morgan Stanley client note is not publicly accessible, so the figures are outlet-reported.
How far would the fall be if rates stay on hold?
The Inference estimates about 10% if the RBA holds rates where they are, and toward 15% if it keeps tightening. This is The Inference's own estimate framing, and AAP's reporting quotes the note only to say interest rates are the key sensitivity of the downturn's depth.
What did RBA Deputy Governor Andrew Hauser actually say?
On 21 October, Hauser said the inflation outlook "looks materially worse" than the bank's August projections, that the three upside inflation risks the RBA identified in August had all crystallised by September, and that oil prices are about a third higher than the bank assumed in August. He noted the board was unanimous in September and "stood ready to do more if needed."
When is the next RBA decision and what comes before it?
The September-quarter CPI is released by the ABS on Wednesday 28 October 2026 at 11:30am AEDT. The RBA decision is announced on Tuesday 3 November at 2:30pm AEDT, with EconoTimes reporting the board meets over November 2-3. The cash rate currently stands at 4.60% after four hikes in 2026.
How does this compare with other house price forecasts?
CommBank economists expect national prices to fall around 9% peak to trough, with Sydney around 13% and Melbourne around 12%. AMP expects around 10% nationally and 11% for capital cities, and says a 20% or more crash is unlikely without much higher unemployment. Cotality's data shows values are already 5.2% below the March 2026 record nationally.
This article reports on bank-research calls carried via outlet reporting as of October 2026. Forecasts are not facts, and nothing here is financial advice.
