Australia’s property market is moving through a softer phase. Rising interest rates, stretched affordability, and the federal budget’s tax reforms have eased buyer demand.
This is particularly evident across Sydney, Melbourne, and Canberra, where prices have drifted lower since the start of the year.
Conditions vary considerably by location, property type, and price bracket. While some markets continue to hold firm, others are seeing more listings, longer selling times, and vendors with greater motivation to negotiate.
For buyers who are prepared, a quieter market can present a different set of opportunities than what was available during the peak. So, what does a softer market actually mean for buyers?
Falling prices may make entry easier
Property values have been recording noticeable declines across a number of markets, with Sydney, Melbourne, and the ACT among the areas seeing the most movement. Auction clearance rates have hovered around 50% in recent weeks, a level hitting a six-year low and some experts are now expecting price declines of up to 10%.
While falling prices can reduce the entry point for some buyers, lower values don’t automatically translate to greater affordability. Higher interest rates affect how much buyers can borrow, which remains an important consideration regardless of where prices sit.
Less competition, more motivated sellers
As market conditions soften, buyer competition has eased in many areas, though supply constraints in some locations mean demand remains relatively firm.
In markets where the balance has shifted, vendors may have greater motivation to negotiate. This can create more room for discussion around price, purchasing conditions, and settlement terms than was typical during the peak of the market.
Vendor discounting
We are already seeing vendors discounting their prices amidst weaker market conditions.
According to Cotality, buyers have been paying around 5% less than the original asking price for private treaty purchases across capital cities in recent months, which is above the decade average of 3.3%.
The federal budget’s proposed changes to negative gearing and the Capital Gains Tax discount have also added uncertainty for investors, with some agents already adjusting price guides in response to weaker demand.
Properties are also taking longer to sell in many markets. For buyers, more time on the market can mean more opportunity to research, compare, and enter into negotiations without the same pressure that characterised the peak of the cycle.
Different real estate methods
Given the changing market, some sellers may opt for “expression of interest” (EOI) campaigns or private sales, rather than auctions. This can be beneficial for buyers, as it gives them more time to make calculated purchasing decisions.
With an EOI, buyers are invited to submit their best and final offer in writing by a specific date, along with their preferred terms and conditions. Under a private sale or private treaty, the property is listed with an asking price attached. These kinds of real estate methods offer buyers more time, lower-pressure negotiations, and the ability to potentially include subject-to-finance or building and pest inspections in their contracts.
Auctions, on the other hand, are generally unconditional and can be highly competitive. It’s best to come with a sense of urgency to act.
Ready to talk through your finance options?
If you’re thinking about taking advantage of the softening market conditions, understanding your borrowing capacity and finance options early can put you in a stronger position when the right property comes along.
bspoke finance – tailored lending for everyday people
