Property Prices Falling: What It Means for Buyers

Property prices are falling across Australia, but the slowdown isn’t affecting every home equally.

According to Cotality, Australia’s median property value fell 0.7% in July, the largest monthly decline since December 2022. Values were also down 1.9% over the July quarter.

But underneath those headline figures is an interesting divide.

Higher-value properties are recording significantly larger falls, while more affordable homes have been much more resilient.

For buyers, that could create greater negotiating opportunities in some parts of the market. For sellers, getting the price right is becoming increasingly important.

Where Are Property Prices Falling the Most?

The higher end of Australia’s property market is experiencing the greatest price pressure.

Over the three months to July:

• Upper-quartile home values fell 3.2%.
• Lower-quartile home values increased 0.3%.

This highlights why national property price figures don’t always tell you what’s happening in the particular market you’re looking to buy or sell in.

Conditions can vary considerably depending on the suburb, property type and price range.

Why Are More Expensive Homes Falling Faster?

Affordability is playing a major role in the changing property market.

Higher home loan rates affect both borrowing capacity and mortgage repayments. At the same time, cost-of-living pressures are encouraging many buyers to be more cautious about how much they’re prepared to borrow.

That can push more buyers towards affordable properties.

A buyer who might previously have considered a higher-priced property may now choose a less expensive home to maintain a comfortable financial buffer.

When this happens across the market, demand can remain stronger for affordable properties while conditions soften at the higher end.

Is Australia Becoming a Buyer’s Market?

Some parts of Australia’s property market are becoming more favourable for buyers, but conditions vary considerably.

Falling property prices, weaker buyer confidence and changing seller expectations can create greater negotiating opportunities, particularly where a property has been listed for some time or the vendor is motivated to sell.

However, affordable properties may continue to attract strong competition.

Rather than asking whether Australia has become a buyer’s market, it can be more useful to ask:

Has the particular suburb and price range I’m considering shifted in my favour?

What Do Falling Property Prices Mean for Buyers?

Softer market conditions can give buyers something that was in short supply during rapidly rising markets: time and negotiating power.

Depending on the property and location, buyers may have greater opportunity to negotiate on price, properly assess a property and avoid feeling pressured into making an immediate decision.

The higher end of the market could provide particularly interesting opportunities given the larger falls recorded in upper-quartile property values.

However, a lower purchase price is only one part of the affordability equation.

Your home loan rate, deposit, borrowing capacity, repayments and financial buffer are just as important.

Know Your Borrowing Capacity Before You Negotiate

This is where preparation can make a real difference.

Knowing your borrowing capacity before making an offer gives you a clear financial ceiling.

It can help you determine:

• The price range you can realistically consider.
• What your estimated mortgage repayments may look like.
• How much financial buffer you’ll have remaining.
• Whether you have room to negotiate.
• When it’s time to walk away.

In a changing property market, knowing your numbers can help you negotiate based on your financial position rather than emotion.

What Does the Changing Property Market Mean for Sellers?

Sellers may also need to adjust their expectations.

When property prices are rising rapidly, vendors can sometimes set ambitious asking prices and wait for buyers to catch up.

A falling or slower market can be less forgiving.

If comparable properties are selling for less and buyers have more choice, setting an unrealistic asking price may result in a longer selling campaign.

Realistic pricing could therefore become increasingly important, particularly for higher-value properties where the latest figures indicate greater downward pressure.

Should You Wait for Property Prices to Fall Further?

Trying to identify the exact bottom of a property cycle is extremely difficult.

Even while national property prices are falling, individual suburbs, price ranges and property types can behave very differently.

Interest rates, housing supply, borrowing capacity and buyer competition can also change while you’re waiting.

For many buyers, a more useful question is:

Can I comfortably afford the right property if I find it?

If the answer is yes, and you’ve found a property that suits your needs and long-term plans, broader market movements may be only one part of your decision.

Why Home Loan Pre-Approval Can Help

Home loan pre-approval can provide an indication of how much a lender may be prepared to lend you, subject to its lending criteria and final assessment.

It can help establish a realistic property budget before you begin negotiating.

This can be particularly valuable in a softer market.

If a vendor becomes more willing to negotiate, you’ll already have a clearer understanding of your borrowing ceiling and whether the opportunity genuinely works for you.

Prepare Before You Negotiate

Falling property prices are changing the balance between buyers and sellers, but Australia isn’t experiencing one uniform property market.

Higher-value homes are currently experiencing greater downward pressure, while lower-priced properties have remained more resilient.

For buyers, that could create opportunities, particularly in parts of the market where sellers are becoming more flexible.

But knowing your borrowing capacity before you negotiate is essential.

At Home Loans Australia, we can help you understand your borrowing capacity, compare home loan options and establish a realistic buying range before you start negotiating.

Contact us now: https://homeloansoz.com.au/contact/

A changing market may give you more negotiating power. Knowing your numbers helps you use it.

Frequently Asked Questions About Falling Property Prices

Are property prices falling in Australia?

Australia’s median property price fell 0.7% in July and 1.9% over the July quarter, based on the Cotality figures referenced in this article. However, price movements vary considerably between locations, property types and price ranges.

Which properties are falling in value the fastest?

Higher-value properties have experienced greater declines. Upper-quartile home values fell 3.2% over the three months to July, while lower-quartile values increased 0.3%.

Why are cheaper properties holding their value better?

Affordability pressures can concentrate demand in lower price ranges. Higher mortgage rates, borrowing constraints and cost-of-living pressures may encourage buyers to consider more affordable homes.

Is it a good time to buy property?

That depends on your individual finances, the property and local market conditions. Softer conditions may provide greater negotiating opportunities, but buyers should consider their borrowing capacity, repayments and financial buffer before purchasing.

Should I get home loan pre-approval before making an offer?

Pre-approval can provide an indication of how much you may be able to borrow, subject to lender criteria and final approval. It can help you establish a realistic price range before negotiating on a property.