Property prices have fallen, so is now a good time to buy?

Collage of a confused woman thinking about two different speech bubbles.

Australian property has had a bumpy year, with falling prices, rising interest rates, and slowing sales leading to an overall cooler market than we started with in 2022. Many buyers have sensed a promising window of opportunity, but is now really a good time to buy in?

Bizarrely, some of the best reasons to get into property at the moment are also some of the worst. Let’s break down the pros and cons of each.

Prices

Collage of a woman falling down a white downwards arrow on a pinkish red background.
  • Pro: prices have fallen
  • Con: not by much, or where it matters most

Corelogic reported a -4.6% price drop between July and September this year across Australia’s capitals. While this sounds like great news, this number conceals some of the nuance. The big markets – Sydney and Melbourne – have been hit first and hardest with the turbulence, while smaller markets like Adelaide and Perth have proved more resilient. 

Additionally, these price drops have mostly been seen at the expensive end of the market, meaning the most affordable properties are still largely priced in line with the lingering 2021 boom

However, as rising interest rates continue to put off potential buyers, vendors desperate to sell will have to continue compromising on price, which will further slow down the market into the new year.

So while prices have fallen and will likely continue to do so, the benefits will be highly dependent on where you’re planning to buy. Try for smaller submarkets like regional Australia for more stable waters, and remember buying off-market is always an option. 

Prices in general tend to increase over time, too, so you could potentially take advantage of capital growth by buying low in a good location then reaping the benefits later. Either way, a long-term mindset is critical to purchasing cheaper properties.

Vendors

Collage of people rushing a door labelled vacant as a man stands in front of it with a megaphone.
  • Pro: it’s a buyer’s market
  • Con: smaller housing supply

Speaking of sellers: on average, properties have been sitting on the market for much longer than they used to (32 days in July vs. a recent low of 20). This puts pressure on vendors to be more flexible with their price expectations if they want to sell, creating a more buyer-friendly market.

If you’re keen to negotiate a better price, look for properties that have been sitting on the market for at least six weeks or more (though be wary of anything that still hasn't sold after six months, which indicates either a really sentimental seller or really dodgy property). This gives you a better chance of finding a vendor more willing to ‘pass in’ any bids, especially after an unsuccessful auction.

However, as more sellers cotton onto the less than ideal conditions, this will likely reduce the supply and eventually drive up prices as competition heats up, so keep in mind there not be as much choice as there used to be in certain areas.

Interest rates

Collage of a hand pushing up a purple bar while others push up green, like rising interest rates.
  • Pro: smaller lenders are competing for good deals
  • Con: interest rates are rising

Sky-high interest rates have been a major force behind the downturn, mostly because it reduces the borrowing power of first home buyers and prices many out of the amount they need to successfully buy-in. (Though other factors like stricter serviceability requirements don’t help either). 

With no end to inflation in sight, most estimates place the cash rate at a peak of 3.60% by February 2023 – meaning most mortgage rates will have risen 350 basis points in less than a year.

However, competition has heated up between lenders over variable deals, especially amongst smaller online lenders. Major banks like CommBank, Suncorp, and Macquarie have even slashed long-term fixed rates in the hopes of bringing new borrowers to the table, so there may be more competitive options out there than you think. 

You can compare home loan interest rates through our hub to get a sense of which rates stack up the best. We’ve also done a home loan rate check comparing the Big Four banks to the little guys.

Economic uncertainty

Collage of a woman hugging green bubble letters that spell risk.
  • Pro: looming recession?
  • Con: looming recession?

Reading the housing market can sometimes feel no better than reading tea leaves, but there are some troubling and genuine warning signs of a looming recession.

A recession would significantly impact the cost of financing a house, whether it’s buying in or paying off the one you already have. Property prices would be more broadly thrown into chaos as values plummet and demand fluctuates. This scenario could potentially put you into negative equity

If interest rates return to attractive lows, demand might rekindle once more (this is partially what caused last year’s boom), but the uncertainty makes it especially tricky to gauge whether it’s a good idea to pounce now – or be sorry later.

RELATED: Why understanding monetary policy can help you save money

There’s also your personal finances to consider, since if you’re well-placed to weather a potential recession with secure employment and plenty of savings, the uncertainty might actually be good news for you. But for everyone else, especially with the cost of living on the rise, it’s worthwhile to weigh up your long-term prospects.

Should you buy into a falling market?

Collage of two hands shaking over building, successful property sale style.

Like any other time in the cycle, whether you buy in is ultimately up to you and your circumstances. The perfect time for you will depend on where you’re buying, how much you can borrow, and other personal factors like whether you’re keen to avoid climbing rents or can afford a large deposit. Buying in a market downturn can come with great benefits, but the benefits have to work for you. So do your research, keep a finger on the pulse, and be prepared to invest some time into finding your dream home. 

The market will do its own thing – so should you.

Research is key to taking full advantage of market conditions. Check out our property hub for more expert guides and compare home loans on offer below.

Home loan comparisons on Mozo

Mozo may receive payment if you click the products below. We don’t compare the entire market, but you can search our database of 473 home loans.
Last updated 22 June 2024 Important disclosures and comparison rate warning*
  • Basic Home Loan

    • Owner Occupier
    • LVR<60%
    • Principal & Interest
    Interest rate
    6.14 % p.a.
    Variable
    Comparison rate
    6.16 % p.a.
    Initial monthly repayment
    $3,043
    Go to site

    Enjoy a low rate home loan with $0 application fee and $0 ongoing fees. Flexibility to split your loan and set different repayment types. Fee free redraw from your loan using online banking. Flexible ways to repay. 40% Deposit required.

  • Unloan Variable

    • Owner Occupier
    • LVR <80%
    Interest rate
    5.99 % p.a.
    Variable
    Comparison rate
    5.90 % p.a.
    Initial monthly repayment
    $2,995
    Go to site

    Built by CommBank, the Unloan is the first home loan with an increasing discount (conditions apply) for borrowers. No application or banking fees. No monthly account keeping or early exit fees. Apply online in minutes.

  • Offset Home Loan

    • Owner Occupier
    • LVR<60%
    • Principal & Interest
    Interest rate
    6.14 % p.a.
    Variable
    Comparison rate
    6.39 % p.a.
    Initial monthly repayment
    $3,043
    Go to site

    Ability to open up to 10 offset accounts per loan account. Fast online application. Linked Debit Mastercard® with fee-free access at ATMs across Australia. Package a credit card with your home loan and the annual card fee will be waived (T&Cs apply). 40% deposit required.

  • Unloan Variable

    • Owner Occupier
    • LVR <80%
    Interest rate
    5.99 % p.a.
    Variable
    Comparison rate
    5.90 % p.a.
    Initial monthly repayment
    $2,995
    Go to site

    Built by CommBank, the Unloan is the first home loan with an increasing discount (conditions apply) for borrowers. No application or banking fees. No monthly account keeping or early exit fees. Apply online in minutes.

  • Discount Variable Home Loan

    • Owner Occupier
    • LVR<70%
    Interest rate
    5.99 % p.a.
    Variable
    Comparison rate
    6.01 % p.a.
    Initial monthly repayment
    $2,995
    Go to site

    A low rate home loan for owner-occupiers packed with great features including unlimited extra repayments, free online redraw, no application or monthly admin fees. Rate will vary depending on LVR. Winner of a Mozo Experts Choice 2024 Low Cost Home Loan Award^

  • Variable Home Loan 90

    • Principal and Interest
    • LVR <90%
    Interest rate
    6.04 % p.a.
    Variable
    Comparison rate
    6.06 % p.a.
    Initial monthly repayment
    $3,011
    Go to site

    Affordable home loan rate for buyers or refinancers. No monthly or ongoing fees. Option to add an offset for 0.10%. Access to savings with unlimited redraws available. Minimum 10% deposit required.

  • Fixed Rate Loan

    • Owner Occupier
    • Principal & Interest
    • LVR <80%
    Interest rate
    6.09 % p.a.
    Fixed 3 years
    Comparison rate
    6.15 % p.a.
    Initial monthly repayment
    $3,027

    Additional repayments of up to $10K per fixed year. Interest rate discounts available. Waiver of $499 application fee when combined with an Orange Advantage Home Loan.

  • The Better Home Loan Special Offer

    • Owner Occupier
    • Principal & Interest
    • LVR<80%
    Interest rate
    6.14 % p.a.
    Variable
    Comparison rate
    6.14 % p.a.
    Initial monthly repayment
    $3,043
    Go to site

    Enjoy a variable rate home loan with a bunch of features from Police Credit Union. Make extra repayments at any time without penalty. No monthly, annual or upfront fees. Free online redraw. Minimum 20% deposit. Qualifying criteria applies. Minimum loan amount is 200K. For new customers only. Mozo Experts Choice Home Lender Credit Union of the Year 2023.

  • Basic Home Loan

    • Owner Occupier
    • LVR<60%
    • Principal & Interest
    Interest rate
    6.14 % p.a.
    Variable
    Comparison rate
    6.16 % p.a.
    Initial monthly repayment
    $3,043
    Go to site

    Enjoy a low rate home loan with $0 application fee and $0 ongoing fees. Flexibility to split your loan and set different repayment types. Fee free redraw from your loan using online banking. Flexible ways to repay. 40% Deposit required.

  • Mortgage Simplifier

    • LVR<80%
    • Owner Occupier
    • Principal & Interest
    Interest rate
    6.14 % p.a.
    Variable
    Comparison rate
    6.17 % p.a.
    Initial monthly repayment
    $3,043

    Get a competitive variable rate with ING’s Mortgage Simplifier. Free extra repayments, no monthly or annual fees. Freedom to make free extra repayments or redraws.

  • Offset Home Loan

    • Owner Occupier
    • LVR<60%
    • Principal & Interest
    Interest rate
    6.14 % p.a.
    Variable
    Comparison rate
    6.39 % p.a.
    Initial monthly repayment
    $3,043
    Go to site

    Ability to open up to 10 offset accounts per loan account. Fast online application. Linked Debit Mastercard® with fee-free access at ATMs across Australia. Package a credit card with your home loan and the annual card fee will be waived (T&Cs apply). 40% deposit required.

  • Basic Home Loan

    • Fixed
    • Owner Occupier
    • Principal & Interest
    • LVR<70%
    Interest rate
    6.25 % p.a.
    Fixed 3 years
    Comparison rate
    6.20 % p.a.
    Initial monthly repayment
    $3,079
    Go to site

    No upfront or ongoing fees. Free extra repayments and redraw facility. Option to earn Qantas points. Min 30% deposit required. Borrow up to $750,000.

  • Offset Home Loan

    • Fixed
    • Owner Occupier
    • Principal & Interest
    • LVR <70%
    Interest rate
    6.25 % p.a.
    Fixed 3 years
    Comparison rate
    6.42 % p.a.
    Initial monthly repayment
    $3,079
    Go to site

  • Fixed Rate

    • Owner Occupier
    • Principal & Interest
    • <80% LVR
    Interest rate
    6.59 % p.a.
    Fixed 3 years
    Comparison rate
    7.06 % p.a.
    Initial monthly repayment
    $3,190

    Enjoy up to $3000 cashback for eligible first home buyers and $2000 cashback for refinancers on eligible home loans with the ANZ Fixed Rate Home Loan. Get the security of repayment certainty with a competitive locked in rate. No ongoing fees to pay. Offset account on 1-year fixed loans ($10/month fee applies). Interest-only payments allowed.

image of houses

Need help with refinancing?

You might have questions that need personal answers. We’ve teamed up with the mortgage brokers at Lendi to get you the answers you need, and a home loan deal you deserve.

Learn more

* WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. The comparison rate displayed is for a secured loan with monthly principal and interest repayments for $150,000 over 25 years.

** Initial monthly repayment figures are estimates only, based on the advertised rate. You can change the loan amount and term in the input boxes at the top of this table. Rates, fees and charges and therefore the total cost of the loan may vary depending on your loan amount, loan term, and credit history. Actual repayments will depend on your individual circumstances and interest rate changes.

^See information about the Mozo Experts Choice Home Loan Awards

Mozo provides general product information. We don't consider your personal objectives, financial situation or needs and we aren't recommending any specific product to you. You should make your own decision after reading the PDS or offer documentation, or seeking independent advice.

While we pride ourselves on covering a wide range of products, we don't cover every product in the market. If you decide to apply for a product through our website, you will be dealing directly with the provider of that product and not with Mozo.