302 - Make the Most of a Buyer's Market
Property prices are falling in some parts of Australia, but many first home buyers are still sitting on the sidelines. If you're wondering should I buy a house when prices are falling, it's worth looking beyond the property price itself. Interest rates, borrowing capacity, rising rents and your ability to hold the property long term can all affect whether buying now actually makes sense for you.
In this episode, Veronica and Meighan explore why so many buyers are hesitating and what the cost of waiting could look like. The conversation moves beyond the headline property price to consider market timing, borrowing power, negative equity, property negotiation and how to find a home you can comfortably afford and hold for the long term.
Here's what we cover and why it matters:
🏠 Why Falling Prices Don't Always Mean Better Affordability
A falling property price can look like good news for buyers, but price is only one part of the affordability equation. If interest rates rise while property prices fall, your borrowing capacity may shrink at the same time, meaning the cheaper property may not actually be easier for you to afford.
The episode uses the example of buyers who had spent years saving and were ready to purchase, only to see their borrowing capacity fall as interest rates increased. At the same time, rents continued to rise, making the decision to keep waiting more complicated. This is why the question isn't simply whether property prices are falling, but whether the overall cost of buying still works for your circumstances.
📉 Is It Better to Wait for House Prices to Fall?
It's easy to assume that waiting will automatically lead to a better buying opportunity when the market is declining. But is it better to wait for house prices to fall if your borrowing capacity is also changing and you're continuing to pay rent?
The episode explores the real cost of waiting, including rising rental costs, changing borrowing power and the risk of missing the point where a suitable property becomes available at a price you can afford. Rather than trying to predict the exact bottom of the market, the focus is on understanding your own financial position and knowing what conditions would make you comfortable buying.
💰 Know Your Borrowing Capacity Before You Buy
A pre-approval is not something to set and forget. When interest rates change, your borrowing capacity can change too, which means the budget you had a few months ago may no longer reflect what you can comfortably afford.
The episode recommends reassessing your borrowing capacity, setting a personal budget rather than simply using the bank's maximum and stress-testing your repayments. These steps can give you a clearer picture of your position before you start making offers and help you avoid relying on a property price alone to determine affordability.
🔎 Focus on Quality, Not Just a Cheap Property
A falling market can create opportunities for buyers because there may be less competition, more time to conduct due diligence and greater scope to negotiate. But a lower price does not automatically make a property a good purchase.
The episode encourages buyers to look closely at comparable sales, the quality of the property and whether the price makes sense for the asset. Learning how to buy in a buyer's market means using the additional negotiating power available to you without losing sight of the fundamentals. The goal is not simply to find the cheapest property, but to find the right property at a price that stacks up.
🤝 Use Property Negotiation to Your Advantage
When conditions become more favourable to buyers, negotiation becomes an important part of the buying process. Sellers may have more incentive to consider different prices or contract terms, giving buyers an opportunity to negotiate rather than simply accepting the first position put forward.
Understanding how to negotiate property prices starts with knowing what comparable properties have actually sold for and having a clear view of what the property is worth to you. The episode also discusses negotiating terms, such as settlement periods, rather than focusing exclusively on the purchase price. A buyer's market can give you more room to negotiate, but good negotiating in a falling market still requires preparation and discipline.
🏦 Understand the Risks of a 5% Deposit
Buying with a 5% deposit can help eligible buyers enter the market sooner, but having a small amount of equity means there is less protection if property values fall after purchase.
The episode discusses the possibility of negative equity and why this matters particularly for buyers who may need to sell again soon. The key consideration is whether the mortgage remains affordable and whether you can comfortably hold the property over the long term. A small deposit does not necessarily make buying a bad decision, but it does make understanding your financial position and the quality of the property particularly important.
🏗️ Be Careful With Off-the-Plan Property
The changing market also creates risks for buyers considering new developments or off-the-plan purchases. If there is a significant period between signing a contract and settlement, the property's value could change during that time.
The episode highlights the importance of understanding valuation and settlement risk before committing, particularly when buying in a falling market. Buyers need to consider not only whether the property works at today's price, but also what could happen if market conditions change before they settle.
🎯 By the end of this episode, you'll have a clearer framework for deciding when is the right time to buy your first home, balancing property prices with borrowing capacity, negotiation opportunities, rental costs and your ability to hold the home long term.
Episode Highlights:
00:00 - Why Waiting for Property Prices to Fall Can Backfire
01:33 - Are Falling Property Prices Really Good News?
04:49 - What Makes It a Buyer's Market?
08:38 - Why Your Home Buying Budget May Have Shrunk
10:25 - How Interest Rates Reduce Your Borrowing Power
14:36 - What Happens When Your Property Loses Value?
20:57 - The Three Hidden Costs of Waiting to Buy
25:01 - Property Supply and the Risks of Buying Off the Plan
29:43 - What First Home Buyers Should Check Before Buying
34:43 - How to Decide Whether to Buy or Keep Waiting
01:33 - Are Falling Property Prices Really Good News?
04:49 - What Makes It a Buyer's Market?
08:38 - Why Your Home Buying Budget May Have Shrunk
10:25 - How Interest Rates Reduce Your Borrowing Power
14:36 - What Happens When Your Property Loses Value?
20:57 - The Three Hidden Costs of Waiting to Buy
25:01 - Property Supply and the Risks of Buying Off the Plan
29:43 - What First Home Buyers Should Check Before Buying
34:43 - How to Decide Whether to Buy or Keep Waiting
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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.
