Domain June price report
Image – Canva
  • Waiting for a bargain could be time wasted
  • Different ends of the market are offsetting each other
  • Interest rate rises hit affordable home hard

Many have been waiting for what was supposed to be a post-pandemic housing-crash bargain, but those looking to get a foot in the door of their first property might have to temper those hopes.

Lloyd Edge, of Aus Property Professionals, observed buyers are looking to “wait and see” for a better deal, particularly following promising CoreLogic figures from 3 October that showed national average house prices fell for the third consecutive month in September. The national average is down 1.4 per cent.

The property market, however, is showing much more resilience than economists predicted, said Mr Edge, as they had forecasted a 20% plunge.

“This is because it is really the high value houses that are being hit the hardest with the lower end of the market not seeing too much change. In this way, the higher value properties are absorbing the hit to the market.”

Lloyd Edge, Aus Property Professionals

lloyd internal
Lloyd Edge. Image supplied.

“The reason for this being that the lower end of the market is still in high demand for first home buyers who are competing with investors for these lower value properties,” said Mr Lloyd.

City Month Quarter Annual Total return  Median value
Sydney -1.8% -6.1% -6.0% -4.2%  $                 1,053,131.00
Melbourne -1.1% -3.7% -3.9% -1.0%  $                    774,531.00
Brisbane -1.7% -4.3% 13.4% 17.6%  $                    746,017.00
Adelaide -0.2% 0.1% 19.2% 23.0%  $                    649,983.00
Perth -0.4% -0.4% 4.1% 8.7%  $                    558,879.00
Hobart -1.4% -4.5% 2.0% 5.9%  $                    705,079.00
Darwin 0.0% 1.4% 6.2% 12.8%  $                    509,440.00
Canberra -1.6% -4.4% 4.0% 7.9%  $                    886,990.00
Combined capitals -1.4% -4.3% -0.7% 2.0%  $                    798,101.00
Combined regions -1.3% -3.6% 10.1% 14.0%  $                    589,364.00
National -1.4% -4.1% 1.7% 4.5%  $                    730,163.00

Source: CoreLogic, as cited by Lloyd Edge.

Affordable housing hit hard by interest rate rises

Mr Edge said the initial shock of rising interest rates and the potential for further rate hikes are being taken into consideration by lenders when borrowers are being assessed for their serviceability (the ability to pay back a loan).

A borrower will typically be assessed at an interest rate that is 3% higher than the current interest rate to provide a buffer to ensure they are able to repay the loan.

The flow-on effects of rising interest rates are interesting.

As borrowing capacity falls, demand for the lower end of the property market rises. Mr Edge said this is the reason why we are not seeing property prices crashing, and it is not good news for first home buyers, just yet.

“An example of this is that year to September 2022, home prices at the top end of the market lost 3.8% of their value compared to properties in the cheapest 25% of the market which saw their prices 12.8% higher over the same comparable period.”

Lloyd Edge, Aus Property Professionals

When will prices finally fall?

Simply put, when first-home buyers can no longer afford to enter the market and demand for lower-end properties drop. Until then, Mr Edge said he doesn’t expect a huge decline in prices at the lower end of the market. He added that, another constraint on the market includes the continued elevated cost of building and construction.

That said, the current market is classed as a buyers market, said Mr Edge. “It is certainly a good time to buy now as vendors are becoming more fliexbile with their price expectations and the contract negotiations in order to sell their property.”

Of course everyone wants a crystal ball to the future, but Mr Edge made a poignant reminder, noting that many buyers held back during the pandemic but actually lost out when property prices skyrocketed. He also noted that, “If we are able to receive a relief from inflation and the cost of living, we would also expect property prices to start increasing again next year and for it to be more affordable to build or renovate.”

If you are looking to buy a property now but are worried about whether it is the right time, it is best to speak to a professional buyers agent to look at your individual circumstance and who can advise you on the right strategy to purchase your next property.


Disclaimer: This article contains general information and should at no time be considered advice to the reader. The reader should always verify their situation with the relevant certified professionals before taking any further steps. 

You May Also Like

Australian building costs have continued to soar, but has your insurance cover kept pace?

MCG Quantity Surveyors analysis found underinsurance could cost homeowners over $100K to replace a property, with the issue even more profound in the commercial property sector.

When will Australian property prices fall? One major challenge continues to prop prices up

Property prices are up by over 35% across the country since Covid, and while not the same story in each city, that’s little solace to prospective buyers pulling their hair out.

A window of opportunity could be open for savvy Australian property investors, but time is ticking

One expert has noticed investors are on the move while there’s less competition and fewer buyers in the marketplace.

Why Aussie property buyers aren’t waiting for rate cuts anymore

A surge in home loans shows buyers aren’t waiting for interest rates to drop before taking the plunge.