We've passed the profitable peak for property, so now what? Seller's guide to capital cooldown

By Evlin DuBose · · 3 min read
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Collage of a woman falling down a white arrow like property prices on a red background.

It’s official: the market has turned. New data from CoreLogic shows the Australian property market peaked in April 2022 and has been sliding downhill since, primarily due to rate hikes from the Reserve Bank of Australia (RBA).

So if you’re considering selling your property, here’s what you need to know about the slowdown.

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Rising cost of home loans dragging property price growth

Collage of a woman looking back at red lines, like we're looking back at the housing peak in April 2022.

Each RBA rate hike hits home values like a hammer, beating down gains in major cities like Sydney and Melbourne on a month-to-month basis. While smaller capital markets like Hobart and Adelaide have stayed relatively stable, even regional values have felt the downwards pressure. 

CoreLogic’s research director Tim Lawless notes the falls will likely accelerate as the market adjusts to the long-term effects of rate hikes.

So why is this happening? Ballooning interest rates limit home loan borrowing capacity, which in turn limits affordability and buyer interest. As a result, sellers may have to compromise much more on the asking price than before.

The data from CoreLogic shows these compromises have accumulated to a median -4% vendor discount (difference between asking price and sale price) and a rise in loss-making sales. Sydney, in particular, has felt the weakened values, with loss-making sales climbing to 6.4% while dwelling values sank by 2.4% between April and June.

On the ground, the cooler market makes for chilly receptions at auction, as Mozo PR Assistant Ella Palfreyman noticed when her family tried to sell their home at the end of September.

“After seeing so much growth in the property market these past few years, it's hard to now adjust our expectations,” she says. 

“While there were plenty of viewers at the auction, no one was willing to make a competitive bid, so it kind of feels like everything is at a standstill.”

“Now we are asking ourselves do we adjust our expectations and just sell for a lower price, or wait it out and see if we could sell it for more a year or two down the road?”

The Palfreymans aren’t alone in this uncertainty. The slump is particularly worrying for investors who rode the September 2020 - April 2022 market upswing, which pushed values into a stratospheric 28.6% growth. Now, according to CoreLogic’s head of residential research Eliza Owens, “the nominal gains achieved from that relatively short hold period have already started to erode.”

A major force behind the losses could still be investors selling off stock, notes Owens, since rising rates have been squeezing landlords and owner-occupiers alike. But either way, the numbers indicate peak profitability occurred in April 2022, shortly before the rate hikes began. 

RELATED: How high will interest rates go in 2022?

So it’s not just buyers faced with constrained price expectations: it’s sellers, too. Values will likely sink well into 2023, with major banks like ANZ projecting falls of -15%. 

Now that the RBA has slammed the economy with a sixth rate hike in a row, selling conditions aren’t likely to improve anytime soon.

Wallet

What options do sellers have in a declining property market?

Collage of people celebrating beneath shaking hands because they've successfully sold a property in a falling housing market.

The decision to sell a property is massive, with many pros and cons to weigh up – especially in a declining market when your resale prospects aren’t deeply attractive. 

However, if you’re committed to selling now because it’s the right time for you, regardless of the market, here are some options for getting the biggest bang for your buck.

  • Make your property “move-in ready”. Tidy up the space and refresh old fixtures so prospective buyers feel like they can move in right after purchase. Renovations can help people feel like they’re getting good value, so you have a bit more negotiating power in your pocket. 
  • Consider selling off-market. Exclusivity can help sweeten the deal, so selling off-market makes a compelling option if you’re looking for a quick sale that bypasses the awkwardness of a quiet auction.
  • Add some green or energy-efficient features. Buyers have been hunting for sustainable properties, not just because it’s great for the environment, but because green home installations like solar panels can save money on bills and loans. Increase your property’s attractiveness by adding some eco-friendly features.
  • Keep expectations reasonable. We’re in a difficult housing moment, so don’t overprice your house and turn off what little competition you might have. Work with your property valuator and real estate agent to ensure you’re pricing your dwelling reasonably, and don’t hold out hope for a massive upsell. 

Keep a finger on the pulse with our home loan news hub. Looking to buy property? Compare home loans below.

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Last updated 27 July 2024 Important disclosures and comparison rate warning*

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    Initial monthly repayment
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    BCU Bank’s OMG owner occupied home loan offers a variety of great low rates depending on your deposit. Save with no ongoing annual fees. Access your extra payments when you need to through the redraw facility. Pre-approval valid for 3 months.

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    6.09 % p.a.
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    Initial monthly repayment
    $3,027
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    Competitively-priced variable rate loan. Ideal for owner occupiers and investors. No service fees to pay. Make free extra repayments and redraws. Flexible repayment schedule available.

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    Interest rate
    6.09 % p.a.
    Variable
    Comparison rate
    6.13 % p.a.
    Initial monthly repayment
    $3,027
    Go to site

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    6.14 % p.a.
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    Comparison rate
    6.16 % p.a.
    Initial monthly repayment
    $3,043
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* 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.

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