🎧 EP 294 - Buy Now or Wait? A First Home Buyer's Guide
Buying your first home when property prices are falling can feel like a completely different decision. When the headlines say prices are dropping, waiting can seem like the disciplined choice. Why buy today if the same property could be cheaper in six months? But there is one problem with that approach: nobody can reliably tell you when the market has reached the bottom.
If you've been asking should I buy a house when prices are falling, you're probably hearing plenty of conflicting advice. Some people will tell you to wait, while others will say falling prices are the opportunity you've been waiting for. In this episode, Veronica and Meighan unpack what first home buyers should actually consider when the market is moving in different directions.
They explore buying your first home in a falling market, including what happens when you're buying with a 5% deposit, the risks of high LVR borrowing, and why financial readiness for home buyers matters more than trying to time the market perfectly.
Rather than trying to forecast the next move in property prices, the conversation focuses on what buyers can actually control: their finances, the quality of the property, the price they're willing to pay, their due diligence, and their ability to hold the property over the long term.
🕒 Is There Really a Best Time to Buy a House?
When property prices are falling, waiting can feel like the obvious choice. If prices are cheaper in six months, why wouldn't you hold off?
The challenge is that no one can confidently predict whether prices will keep falling, stabilise, or rebound. As Veronica and Meighan explain, even experienced professionals can misread timing. Economists and forecasters may identify broad trends, but that doesn't translate into precise guidance for individual buyers.
That's why the question of when is the best time to buy a house rarely has a clear answer. Markets shift due to interest rates, migration, policy changes and broader economic forces that can move faster than buyers can react. By the time a turning point is obvious, the best opportunities in specific properties may already have passed.
The real cost of waiting isn't just missing a lower price. It can also be the extended period spent sitting on the sidelines in search of certainty that never arrives. That said, the answer isn't to rush in simply because prices are falling. A more useful approach is to assess whether you are actually ready to buy.
Do you have your finances in order? Have you identified a suitable property? Can you justify the price with evidence? Can you comfortably hold the property if conditions change? And does it suit your needs beyond the short term? These questions don't predict the market, but they do give you a structured way to make a decision you can stand behind.
💰 What Does Buying With a 5% Deposit Really Mean?
For some first home buyers, buying a first home with a 5% deposit can bring homeownership forward. But it also changes the level of risk involved, especially in a falling market. With a 5% deposit, you're borrowing 95% of the property's value, creating a high loan-to-value ratio (LVR). If the property value drops by more than 5% after purchase, you could find yourself in a position of negative equity on paper, where the loan exceeds the property's value.
That doesn't automatically make the purchase a poor decision. If your income is stable and you can comfortably service the loan, short-term price movements may not materially affect your position. Property is typically a long-term asset, and many buyers ride out periods of volatility without issue.
The real risk emerges if you are forced to sell during a downturn. Life events such as job loss, relationship breakdown, or rising interest rates can reduce your ability to hold the property. In those situations, a smaller deposit means less equity buffer to absorb a fall in value.
This is why buying with a 5% deposit is less about access alone and more about resilience. It's important to consider not just whether you can enter the market, but whether you can stay in it if conditions become more challenging. A lower deposit can be a valid strategy, but it needs to be weighed alongside the property itself, the price paid, and your broader financial stability.
🏢 The Risk of Buying Off the Plan in a Falling Market
One of the key risks discussed is the risk of buying off the plan property, particularly for buyers with limited deposits. Off-the-plan purchases can appear attractive at the time of signing, but settlement may occur years later. In that time, market conditions can shift significantly.
This creates valuation risk at completion. If the bank's valuation at settlement comes in below the contract price, the buyer may need to contribute additional funds to complete the purchase. A savings buffer intended for emergencies may instead be used to cover the shortfall, or alternative funding may be required.
This risk becomes more pronounced in a declining market, where the original contract price may no longer reflect current market value by the time construction is complete.
The episode does not suggest that off-the-plan properties are inherently bad. Rather, it highlights the importance of understanding the timing and valuation risks involved, and not relying solely on marketing or perceived future growth.
For low-deposit buyers, understanding the risk of buying off the plan property is essential when assessing whether the structure aligns with their financial position and risk tolerance.
🏡 Why Established Properties Can Give Buyers a Stronger Price Anchor
Established properties offer something off-the-plan purchases often cannot: real-world sales evidence. When assessing an existing home, buyers can review recent comparable sales to understand what similar properties have actually sold for. This provides a grounded reference point beyond agent estimates or online valuations.
This becomes especially useful in a falling market. Price guides and vendor expectations often adjust more slowly than actual market conditions. Recent sales data can therefore provide a more accurate reflection of current value than historical expectations.
The goal is not to find the cheapest property, but to understand where a property sits within the current market and make an informed offer based on evidence.
Developing the ability to interpret comparable sales reduces reliance on external opinions and strengthens a buyer's confidence in their own assessment of value.
🧮 Financial Readiness Matters More Than Just Having a Deposit
A deposit is only one part of being ready to buy a home. The episode emphasises the importance of stress-testing repayments rather than focusing solely on savings. One approach is to model repayments at 2–3% above current interest rates. If repayments become unmanageable under that scenario, the loan may be too stretched.
This is where financial readiness for home buyers becomes critical. Buyers also need to consider how they would manage changes in circumstances. Could repayments still be met if interest rates rise? What happens if income changes? Is there enough savings remaining after settlement to handle unexpected costs?
Maintaining a financial buffer is also important. While it can feel difficult to hold back savings when building a deposit, having at least a few months of expenses set aside can provide stability in uncertain conditions.
The same applies to Lenders Mortgage Insurance. Rather than viewing LMI as something to avoid at all costs, buyers should understand what it means, how it affects their loan, and whether it may be a reasonable trade-off in their situation.
For eligible first home buyers, the federal government's 5% deposit scheme may also influence deposit requirements and LMI outcomes. However, eligibility rules vary, so it's important to confirm individual circumstances with a qualified broker before making decisions.
🔍 A Falling Market Doesn't Automatically Mean a Bad Property
A key distinction in the episode is between a falling market and a bad property. They are not the same thing. A strong property in a good location does not lose its fundamental value simply because the broader market is declining. While prices may fluctuate, underlying quality remains important.
For first home buyers, this means looking beyond short-term price movements and focusing on fundamentals such as location, land value, long-term demand, and suitability for future needs.
The key idea is simple: **you are not buying the market cycle, you are buying the asset. **This helps avoid two common mistakes. One is buying purely because prices are falling without properly assessing the property. The other is avoiding good opportunities entirely due to market uncertainty.
A softer market can also create opportunity, as properties that were previously out of reach may become more accessible. However, the property still needs to stand up on its own merits.
🧭 Use a Process Instead of Trying to Predict the Future
A changing market can give buyers something valuable: time. With less competition and urgency, there is often more opportunity to complete due diligence, review contracts, arrange inspections, and think carefully about pricing.
But that same space can also lead to indecision and delay. If you're asking should I buy now or wait, there may never be a clear signal that feels completely certain. Waiting for perfect clarity can result in prolonged inaction.
Instead, the focus should shift to process. Is the property suitable for your needs? Does the price align with evidence? Can you comfortably service the loan under different scenarios? Do you have a financial buffer? And are you prepared to hold the property long term? This approach removes the need to predict market direction and replaces it with a structured decision-making framework.
🎯 So, Should You Buy a House When Prices Are Falling? There is no single answer that applies to everyone. For some buyers, falling prices may create opportunity, while for others financial constraints or uncertainty may make waiting more appropriate. The key is that buying your first home in a falling market shouldn't come down to timing alone, but instead a combination of factors like financial readiness, property quality, deposit size, borrowing structure, risk tolerance, and long-term plans. While no one can pick the bottom of the market, buyers can focus on making informed, sustainable decisions rather than trying to time the cycle perfectly.
Episode Highlights:
01:35 – Can You Actually Pick the Bottom of the Market?
06:06 – What a 5% Deposit Really Means in a Falling Market
08:15 – The Hidden Risk of Buying Off-The-Plan
11:38 – A Smarter Way to Buy in a Falling Market
17:10 – How to Make Confident Decisions in Uncertain Markets
19:28 – The Question to Ask Before You Decide to Buy
22:17 – Join the First Home Buyer Community
06:06 – What a 5% Deposit Really Means in a Falling Market
08:15 – The Hidden Risk of Buying Off-The-Plan
11:38 – A Smarter Way to Buy in a Falling Market
17:10 – How to Make Confident Decisions in Uncertain Markets
19:28 – The Question to Ask Before You Decide to Buy
22:17 – Join the First Home Buyer Community
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Co-Founders
Veronica Morgan & Meighan Wells
Veronica & Meighan are both licensed real estate agents who exclusively help buyers. Together they have nearly 40 years experience as property professionals.
Veronica is principal of Sydney based Good Deeds Property Buyers and is also co-host of The Elephant in the Room property podcast as well as Location Location Location Australia on Foxtel and author of Auction Ready: how to buy property at auction even though you're scared s#!tless!
Meighan is the multi award winning principal of Brisbane based Property Pursuit, chairperson of the REIQ Buyers Agent Chapter & a regular media commentator.
