Australian property prices recorded a shorter, sharper downturn than any period of price falls since the 1980s. They’ve rebounded, but can it last?
Australian property prices were not long ago expected to fall as much as 20 per cent, but instead recorded the shortest and sharpest downturn since the 1980s.
To find a deeper fall than last year, property watchers would need to go back to the early 1980s when values fell 7.7 per cent in 11 months. “The key factor that kept a floor on the market was the supply side. Vendors retreated to the sidelines,” Lawless said. “Households were able to save a huge buffer and sellers didn’t need to sell on most occasions, and nobody wanted to test the market.”
“We were expecting the higher interest rates to take about 30 to 35 per cent out of borrowing capacity. But when the supply side responded as it did, the stock on the market nationally fell 30 per cent below its 10 year average,” McMenamin said. “It did have an effect of providing a floor to house prices. We’ve never seen the supply side respond as quickly as it did which is what caught us off guard.
“People are baking into the decisions and assumptions that we’re going to have rate cuts and are willing to pay more for housing than they otherwise would,” he said. “Alongside that is fewer buyers who have been constrained by borrowing capacity. Essentially, we’ve seen more buyers buying with cash.”
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