Brighter Buying

Market update: Let’s put price drops in perspective

by Dan D'Silva, Property Consultant 21 September 2022

Most property watchers will have read media reports that Australia’s national home price has now been in decline for four consecutive months.

Brissie saw a sharp drop last month of -1.8 per cent.

So should sellers be concerned or buyers be rejoicing?

Well, probably neither. In relative terms, it’s a small percentage that won’t dent sale prices too much.

For buyers, however, it’s not big enough to make much of a difference to buying power.

An recent article in The Guardian noted that national prices would need to drop 10 times that amount – by 18 per cent – to get us back to the level of affordability we saw two years ago.

In June 2020 the average dwelling price was around 13.4 times the average annual household disposable income. Now it’s 16.4 times. And that price growth was higher than historically expected.

“Take Brisbane. Since 2012, the rise of house prices there had been pretty steady. You could almost count on prices rising by around 3% and you wouldn’t be too far off,” reports The Guardian.

“It meant in June 2020 with a median Brisbane house price of $547,000 you could estimate (and budget) that in two years’ time buying a median priced house would cost around $590,000.

“Cut to reality and the median price for a house in Brisbane in June was $800,000. Just a lazy $210,000 above expectations.”

So in reality, the dramatic price change here in Brissie has happened over the past two years, not the past two months. The changes we’re seeing now are softening the market and this gives buyers greater choice and some negotiating power they haven’t enjoyed in recent years.

On the flipside, sellers are still achieving solid sale prices, well above pre-pandemic levels.

Thinking of making a move?  View our current listings for sale or talk to us about selling.