We close out October this week, and it's certainly been one for the property record books. Unfortunately, not for the reasons many would have hoped.
Sydney has experienced another difficult month of falling property values, extraordinarily weak auction results and an increasingly cautious buyer pool. It's been a challenging spring selling season, with little evidence that the downward pressure on prices has run its course.
But we've covered plenty of that ground over recent weeks. The numbers are there, the price adjustments are evident, and the changing behaviour of buyers and sellers is playing out across the market every day.
The questions we're being asked now are changing. How much longer will this downturn continue? What happens in 2027? Are we approaching the bottom? Will interest rates rise again? And perhaps most importantly, should people be buying property right now?
Nobody knows precisely when this cycle will turn or what will trigger a sustained recovery. There are plenty of predictions, but predictions and evidence are two very different things.
John McGrath suggested this week that we're approaching the bottom of the market. I sincerely hope he's right. He's been around long enough to have experienced plenty of property cycles, but I'd like to see more compelling evidence before sharing that optimism.
We all want a stable property market. We want confidence, healthy transaction volumes and buyers feeling comfortable with the significant financial decisions they're making. But confidence needs to be built on something more substantial than hope.
Life doesn't stop because property prices are falling
We've been negotiating some good sales over recent weeks. They've been hard work, almost without exception.
Negotiations are taking longer, communication is more intensive, and there's a greater degree of give and take required from everyone involved. But deals are being done.
And when you look closely at who's buying, there's a common thread. People are getting on with their lives. Families need more space. There is a fair amount of separation. Children are arriving or leaving. People are relocating, downsizing, changing careers or simply reaching a point where their current property no longer suits their circumstances.
Some decisions are ambitious, others are forced, but life continues regardless of what the property market is doing and there is only so long people can put their plans on hold.
What has changed is the way they're approaching those decisions. Buyers are considerably more disciplined. They're researching harder, inspecting more property and taking longer to commit. They're also factoring the possibility of further price declines into what they're prepared to pay today. And that's where the real tension sits.
Buyers are negotiating against tomorrow's perceived risk, while sellers are negotiating against yesterday's perceived value. It's a difficult gap to bridge.
A seller might feel they're already conceding too much, particularly when comparing today's offers with prices achieved six or twelve months ago.
A buyer, meanwhile, is asking a different question: if I commit today, what happens if the market falls another five or ten per cent?
Neither position is particularly unreasonable. That's the reality of a falling market, and its why transactions are taking longer, and negotiations have become considerably more complex.
The successful sales we're seeing are generally the result of realistic expectations, patient negotiation and a willingness on both sides to recognise the market they're operating in.
November becomes a race to find the buyers
As we move into November, I suspect the market will become increasingly focused on existing stock rather than a significant new wave of listings.
We're already seeing owners defer their campaigns into January and February, hoping a new year might deliver improved conditions or renewed confidence. Whether that proves to be the case remains to be seen.
For the properties currently on the market, the next few weeks are critical. The challenge isn't simply generating another inspection or another enquiry. It's identifying the buyers who are genuinely motivated, financially capable and prepared to make a decision before Christmas.
There are still good buyers in the market. But they're selective, cautious and often reluctant to reveal their full level of interest until they understand precisely where a seller stands. This is where good communication and sensible pricing become critical.
Sellers who recognise genuine buyer interest and engage constructively have a better chance of securing a result. Whereas those waiting for the market to suddenly change direction will find themselves carrying their campaign into 2027.
And then there's the interest rate question
Tomorrow brings another important inflation reading, followed by the Reserve Bank's next interest rate decision on next Tuesday.
Australia's annual inflation rate reached 4 per cent in August, and the prospect of another rate increase is weighing heavily on consumer confidence.
For mortgage holders, another increase will be particularly painful. And it raises a question that I think deserves far more attention.
How much of the inflation problem can realistically be solved by asking mortgage holders to carry an ever-increasing financial burden?
Our cousins across the Tasman provide an interesting example. New Zealand has already experienced a substantial property correction, yet inflation remains above the Reserve Bank's target range. Its September-quarter annual inflation rate was 3.7 per cent, despite years of significant pressure on household finances and property values.
There's something deeply frustrating about watching households absorb higher borrowing costs while many of the inflationary pressures affecting everyday life remain resistant.
Government spending, energy costs, international supply disruptions and structural constraints are the big players in the inflation equation. Yet interest rates remain the central instrument used to bring prices under control. And that instrument doesn't distribute the pain evenly.
Mortgage holders and businesses carrying debt feel it immediately. Others are far less directly exposed. It's a blunt approach to a complex problem, and the property market is firmly in the crosshairs.
The RBA has a mandate to control inflation, yet its principal tool is particularly ineffective at directly addressing many of the underlying cost pressures, most of which the average person on the street has absolutely no influence over.
And yet it's mortgage holders who are being asked to do so much of the heavy lifting. There's something fundamentally wrong with that equation, and I think Australians are entitled to question whether we have the balance right.
So where does that leave us?
Heading into November, I don't see a compelling reason to declare the property market has reached its bottom. Perhaps it has, perhaps we’re close or perhaps there's more adjustment ahead.
What I do know is that the market is functioning, albeit at a slower pace, with tougher negotiations and a much greater emphasis on genuine value. People will continue to buy and sell because their lives require them to.
A difficult property market isn't a market where nothing happens. It's a market where every decision requires greater consideration, more realistic expectations, and a willingness to negotiate.
November will tell us plenty. And with another inflation reading and an interest rate decision immediately ahead, I suspect we're in for another interesting few weeks.
