Is now a good time to sell your property? Pros and cons of selling in a falling market

Collage of a young woman with a magnifying glass with pros and cons of selling your house icons behind her.

This year’s spring selling season seems to have wilted. Despite CoreLogic reporting plenty of new listings hitting the market over September, successful sales and prices lagged behind averages. Properties sat on sale for longer (33 days) while vendor discounts fell to a nationwide median of -4%.

Climbing interest rates and household expenses are primarily to blame, as both have constricted the size of the home loans people can borrow. But despite how difficult it is to buy your first home at the moment, the lack of demand actually skews the slowing market toward buyers – which isn’t great news for sellers. 

So is spring 2022 a good time to sell your property? Depends on you and your situation, and for many of the same reasons it may or may not be a good time to buy.

Let’s break down the pros and cons of selling in a falling market.

Capital gains

Collage of a man surfing an arrow of capital gains.
  • Pro: You can cash in on capital growth.
  • Con: Property prices are falling. 

Over the pandemic, Australian property prices experienced the largest boom on record, clocking a daunting 23.7% growth in 2021. Depending on where they bought, long and short-term owners could be sitting on impressive capital growth

Much of the fuss around falling house prices has been on a growth slowdown, not a genuine “fall”. House prices trend up over time no matter what the market does, so a drop in growth still means property prices are higher now than they were in 2020.

But every boom has a bust, and if the Reserve Bank of Australia continues hiking rates at an aggressive clip, the Big Four banks estimate price drops between 5% - 15% by the end of 2023. And that genuinely would eat into some capital gains, so sooner might be better than later when it comes to cashing in.

Not every suburb will experience those worst-case value drops equally, so location is key to understanding your local market. Otherwise, you could be comparing apples to oranges when deciding whether to sell. 

HOT TIP: Keen to sell in a hurry? Putting your home for sale off-market makes a compelling option.

Buyer’s market

Collage of people standing among white dots on a teal background, like buyers with too much property choice.
  • Pro: You’re entering a buyer’s market if you're selling and buying.
  • Con: If you’re just selling, prepare to negotiate and settle.

Suppose you’re selling one property because you’re buying another. Buyers have more power when there’s plenty of supply but limited demand, so that power also belongs to you.

Plus, selling your property can help you overcome many home-buying cost hurdles, such as saving for a deposit or passing serviceability checks. You may find it easier to break into the current market than others.

RELATED: How to reduce capital gains tax when selling your home

However, if you’re only planning to sell, the ball isn’t in your court. Be prepared for lacklustre auctions and some rounds of negotiation. If your home is ready for someone to move in, you might be well-placed to get a reasonable price. Make sure to keep your expectations realistic and pair your listing with a quality campaign. 

Otherwise, unless you have urgent reasons to sell, consider holding off for now.

Loan details

Rate change

Repayment change if rates go up

A recession may be coming

Collage of a young woman peering over a ledge. Maybe there's a looming recession down there.
  • Pro: Offload risky assets and tighten finances before a market correction.
  • Con: recessions are rough.

While job security seems strong, the Australian economy also shows worrying signs of fatigue – and the RBA could overdo it with rate hikes. If that happens, a recession might be just on the horizon, making an already uncertain property market quite risky.

If a recession hits, the RBA will cut the official cash rate to spur investment. Home loan interest rates would drop, making buying a home more affordable for some and rekindling buyer competition (much like what we saw in 2020). 

Selling a house during a recession can be tricky, but careful research, planning, and timing could help you navigate the chaos and nab you a better price than in a falling market. 

However, if your property currently drains more of your income than you like, offloading a risky asset and shoring up your finances could help you weather the storm ahead.

Read last month's Reserve Bank interest rates update.

So, should you sell your property during a downturn?

Collage of two people debating whether to sell their property during a housing downturn.

The best reasons to sell during a housing downturn are also some of the worst. The difference between them will be your situation and preferences. There may be no genuinely ideal time to sell your property – all that matters is what makes sense for you.

Either way, research is key to making an informed decision. Our guide on monetary policy can help you gauge what’s happening with the economy, while our home loan news hub can help you keep a finger on the pulse. 

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