As has been well documented by now, Australia’s major property markets have undergone a swift and substantive reversal of fortune. It’s been compounded by many factors, including inflation-led interest rate hikes, high construction costs and geopolitical instability. These challenges have left many buyers questioning whether they should buy a property now or wait, as they weigh market conditions, affordability and future property price movements before making one of the biggest financial decisions of their lives.
Yet the unrelenting fundamentals of low supply and high demand kept prices buoyant… that is, until the federal budget straw broke the market camel’s back. The raft of changes to capital gains tax and negative gearing has (as intended) seen investors hit pause on buying and has also compelled many to sell.
Interestingly, however, homebuyers have also retracted from their enthusiasm for purchasing, especially in Sydney and Melbourne. This is curious, because the financial and tax benefits of home ownership remain untouched by the legislated budget proposals.
So, why have homebuyers held back? It’s because many are watching a market come off the boil and thinking, “I want to buy at the bottom of the drop, not at the top.” It’s the classic “I don’t want to catch a falling knife” scenario.
The logic seems sound, but the reality is something far different. In truth, choosing not to act when markets slow could end up being a far more costly decision than choosing to buy when the opportunity presents. Trying to time the market is hard, and ultimately impossible to get exactly right.
Here’s why.
There are plenty of commentators out in the market right now suggesting there’s a long way to fall. Westpac now expects price growth to stall flat across the major capitals for 2026, with Sydney and Melbourne tipped to record outright declines of three and four per cent respectively. NAB have predicted falls of about 10 per cent in Sydney and Melbourne by the end of 2027, and a two per cent decline in national capital city property prices this year. ANZ are predicting the same for those two capitals and has downgraded its combined capital city outlook to just a 2.8 per cent rise in 2026. CBA has slashed its national forecast twice in three months, from five per cent growth in March, to three per cent at budget time, to flat.
But you know what this period reminds me of? The panic that set in the last time the market turned in a big way, which was March 2020, as the COVID pandemic took hold. Back then, the major banks were predicting carnage. CBA modelled a worst-case fall of up to 32 per cent in home values, NAB tipped declines of 10 to 15 per cent, and Westpac warned prices could drop by as much as 20 per cent in a prolonged downturn.
Guess what… they were wrong. National home values dipped by approximately two per cent over five months before the turnaround began. We saw people fleeing to the security of brick-and-mortar, and the positive momentum just kept building. If you had bought just about anywhere during 2020, then to date you’ve probably seen value gains of between roughly 40 and 75 per cent or more, depending on the city.
In short, even the experts don’t know what’s going to happen with absolute certainty.
Experience shows that when things do turn, they turn fast. Again, COVID is the perfect example. That much-feared pandemic downturn lasted from April to September 2020 and shaved just 2.1 per cent off national values. The first monthly increase arrived in October 2020, and the recovery never looked back, with national values surging almost 25 per cent in under two years.
Property is a confidence game, and good news travels fast. If we see things like a cut to rates, a lasting end to hostilities overseas, or a change in government policy, you can be certain buyers will flood back. If you wait for those events to happen before acting, it will already be too late.
We continue to be in a low-supply, high-demand environment. Australia is still building far fewer homes than its growing population needs, listings remain below long-run averages in most markets, and rental vacancies are near record lows. While things are slow now, those fundamentals are akin to a coiled spring. Once it snaps, the market comes hurtling back to life. You can’t beat the fundamentals, and right now they remain firmly in favour of long-term price growth. It’s telling that even amid the current softness, national home values are still around seven per cent higher than they were a year ago.
There’s no getting around the fact that while the overall picture looks a little grim, the nuances of location, price point and property type reveal heightened pockets of opportunity.
A great example is the latest Cotality figures, which show the national index slipping 0.4 per cent in June, with Sydney down 1.2 per cent and Melbourne down 1.0 per cent leading the falls, while Perth rose 0.7 per cent and Brisbane continued to edge higher.
If you work across these markets as we do, you know certain real estate has the potential to come back faster and more dramatically than the rest. Choosing that property, by applying deep knowledge of price, location and property type, is key.
Holding your property for at least a full cycle will smooth out the market’s ups and downs. CoreLogic research covering 30 years of Australian market movements found that despite six distinct cycles of upswing and downswing, national home values rose 382 per cent across the period. Time in the market beats timing the market, every time.
Better still, buying when demand is depressed will amplify those long-term gains. In short, now is the time to position yourself for profit because countercyclical buying is uncomfortable, but that discomfort is exactly why the discounts exist.
The best thing you can do is stay well informed and up to date by relying on guidance from your independent property buying professional. We work in these areas daily and can spot the homes that deliver genuine value when other buyers leave the market. We can help you secure prime opportunities and enjoy the long-term upside, while those who stood to the side will undoubtedly look back one day in regret.
Give us a call on 1300 655 615 to start a conversation about your next property purchase, or click here to send us your enquiry today.
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