As we move into winter, we are assessing subtle but defining changes across the property landscape, tracking the volume of new listings coming online, shifts in buyer behaviour, open home numbers, auction data, and the latest financial news.
We were hoping that post-Federal Budget, the market would settle into a predictable pattern with minimal economic disruption. The goal is simple: a moment of relief from the relentless bombardment of headlines that have hammered the property sector over the last few months. Encouragingly, that stabilisation may finally be starting to arrive.
The media, as usual, remains well behind this market adjustment, potentially six months or more behind the reality we are seeing play out on the streets. Economists and property commentators, many of whom have never spent a single day in the trenches at the coal face of the market, speak with immense authority about what is unfolding. Yet, they do so from spreadsheets collated with lagging, macro-level data.
We touched on this in our weekly market update - The Word (link to video also below): we believe the bottom of the market is either already "in" or we are standing right at the baseline. The market correction was sharp and swift, but across the board, active agents can now clearly see the new pricing watermark.
A prime example of this is the Sydney auction market. While clearance rates are low, they have now been trending in the exact same zone for 11 straight weeks. There is a distinct stability within that weakness. It shows that the initial volatility has passed; the market has found its floor and a predictable baseline has been established.
While some sellers are still struggling to adjust to where active buyer demand is currently positioned - a process that may take a few more months to fully realign. The floor is firmly in.
We know this for a few key reasons. First, we can see the new watermark across all price points and observe exactly where buyers are prepared to trade. We now have a clear line showing where market confidence is evident. Secondly, history proves that during any market adjustment, whether moving up or down, the street always moves well ahead of the official data. In extreme cycles, this current event being a prime example, the live market can move a full six months ahead of the statistics.
The so-called experts and sensational headlines suggested we were on track for the largest correction in 40 years, forecasting a 10% drop in national housing values. The reality on the ground is that we already witnessed a 10% correction across many price points and suburbs by the end of March, with certain sectors adjusting by as much as 15% to meet where buyers are willing to trade. Based on actual street behaviour, that major adjustment didn’t just arrive; we are already in it and working through it.
It is not hard to fathom why this happened so rapidly. Speak with any bank or mortgage broker and they will tell you that buyer borrowing capacity was clipped by 15% to 20% following three interest rate increases. Combine that with the recent Federal Budget adjusting for Capital Gains Tax and trust changes, and it is only natural that we see those constraints play out across the transaction line, even more so given that affordability was already at maximum strain levels.
The key trend we are watching closely as winter takes hold is for buyers to recognise these new pricing levels and begin transacting with greater awareness, which always breeds confidence over time. It is entirely possible that values sit idle at this current level for the next 12 to 18 months, which is completely understandable. However, seeing any further significant downshift from today’s pricing looks highly unlikely.
Therefore, the game plan is changing and should change for many moving through the property cycle. For sellers, the priority is to position your property accurately and at the fresh adjusted value line. For buyers, the line in the sand has been drawn, meaning that waiting longer offers no material price advantage.
Let's see how this continues to evolve throughout June. While we are not looking at a massive, rapid recovery, we’ll be clear about that, we can see some balance slowly being restored, and an evident trading line is being established for both buyers and sellers.
Watch the most recent The Word update below:
