Many people dream of buying at the bottom of the property market, but how often does that truly happen? If you’re saving for your first home and banking on a sharp drop in house prices due to rising interest rates, you might need to adjust your expectations.
Despite forecasts of significant price declines, recent trends show otherwise. In fact, property values have risen in cities like Sydney, Melbourne, and Perth over the past month. Meanwhile, the Reserve Bank of Australia’s series of rate hikes has significantly reduced borrowing power—by as much as 35% in some cases—compared to just a 9% drop in house prices since mid-2022.
Although the market may not have definitively hit bottom yet, the pace of price declines has been slowing since late last year. This is often a sign that the market is stabilising, and history tells us what tends to happen next—prices start to climb.
Sydney, often viewed as a barometer for the national market, recently recorded its first price increase since early 2022, with Melbourne and Perth showing modest gains as well. With the Reserve Bank signalling a possible pause in rate hikes and winter approaching—a traditionally quieter time for real estate—the market could be primed for renewed growth by spring. This window may offer first-home buyers a critical opportunity to enter the market before competition heats up again.
Why Waiting Could Cost You
Housing market sentiment often lags behind real-time conditions. By the time data confirms the market has bottomed, it’s usually months too late. Moreover, waiting for prices to fall further may not work in your favour. Borrowing capacity has been shrinking faster than property values, and once prices stabilise and rates ease, competition will intensify, potentially pricing out buyers who waited too long.
Consider this: a 0.5% rate hike reduces borrowing power by approximately 5%. If you could borrow $500,000 a year ago, that figure might now be closer to $325,000. Meanwhile, the $500,000 home you once considered may have only dropped to $455,000—still out of reach.
The Broader Market Trends
Affordable home prices, particularly those under $1.2 million, have largely stabilised across much of the country. And while regional variations persist, market confidence is gradually strengthening. The migration boom, combined with shifts in living arrangements post-pandemic, continues to exert pressure on both rentals and home purchases.
Self-storage facilities, for example, are now at capacity, reflecting the ripple effects of families downsizing, renovators holding out for better conditions, and renters moving back home due to affordability challenges. This pent-up demand for housing is likely to translate into increased buyer activity as conditions improve.
A Call to Action
For those holding out for “the perfect moment,” it’s worth noting that the fundamentals of real estate—supply, demand, and confidence—are aligning for a rebound. With listings running significantly below the five-year average and demand ready to surge as soon as the Reserve Bank signals stability, waiting could mean missing out.
In short, the time to act may be sooner than you think. The real estate market thrives on momentum, and the starting gun for the next growth phase could fire at any moment. Don’t let hesitation or outdated assumptions leave you behind.
