What happens if real estate prices fall?

The news follows CoreLogic’s announcement of the first decline in Sydney property prices in over a year. In February, Sydney home values ​​for all dwellings fell just 0.1%, while all other capitals rose.

“If the ABC’s forecast comes true, the median house price in Sydney could fall by almost $150,000 by the end of 2023,” said Sally Tindall, research director at RateCity.

With the forecast decline of 3% this year and 9% next year, Sydney’s median house price of $1,410,128 (February 28) would fall to $1,213,686 and dwellings from $1,116,219 to 969 $568.

House prices in Melbourne would rise from $998,356 to $880,871 and dwellings from $799,756 to $701,842.

“This could be the beginning of the end for the current spike in house prices in Australia’s two biggest cities,” she said.

To temper homebuyers’ anxiety over declining equity in their homes due to projected increases, Ms Tindall said: ‘It’s worth looking at the bigger picture. Any decline in house prices will stem from monumental gains across the country over the past year and a half, which have sent most homeowners’ net worth skyrocketing.

Recognizing that it can be stressful to buy a property at a record price before a market downturn, the research director recommended that homeowners “keep their heads down and their mortgage payments high.”

In this way, “they should be able to overcome any dip”.

For first-time home buyers, a drop in prices could even be an opportune time to enter the market. But, she advised this cohort to “work out the numbers before popping the champagne.

Pointing out that lower prices and higher rates could mean a lower deposit, Ms Tindall pointed out that it also means higher monthly repayments and less chance of accessing credit.

In all, First-time home buyers should think carefully before overextending themselves in a market where rates are expected to rise and prices are expected to fall. Make sure you have a buffer to ride out the bumps.

About the Author

Noemi Pamintuan-jara

Noemi is a journalist for Smart Property Investment and Real Estate Business. She has extensive experience writing for the business, health and education sectors. Noemi is a contributing author of a summary published by the American Public Health Association and Best Practices in Emergency Pedagogical Methods in Germany. She shares copyright ownership of an instructional video for pharmacists when communicating with deaf patients. She attended De La Salle University where she obtained a double degree in psychology and marketing… Read more

What happens if real estate prices fall?




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Last update: March 09, 2022

Posted: March 10, 2022