A property agent who says they have lived through eight market cycles argues that the current slowdown could be the buying window many investors have been waiting for. The claim runs against many of the louder headlines, so it is worth testing rather than accepting or dismissing.
What happened
Australian Property Investor Magazine publishes an opinion piece by Andrew Bell, OAM, owner-operator of Ray White Bell Group. The author describes the slowdown as the normal end of a five-year price rise, driven largely by higher interest rates, and says most sellers are still well ahead of their purchase prices. The central line is "Buyers arguably have their best opportunity in five years." (Andrew Bell)
The author names cost-of-living pressure, higher interest rates and federal tax changes affecting property investment as the current drags on confidence. Victoria is singled out as hit harder, with high land taxes and vacancy taxes on holiday homes cited. The piece also argues that Australia is not building enough homes for its population, although it gives no supply figures to support that point.
The worked example is the part readers are likely to remember. On a $1.4 million property with a $1 million mortgage, the author notes that a one percentage point rise in rates adds about $10,000 a year in interest. A 5 per cent fall in price would mean $70,000 less to pay, and a 10 per cent fall would mean $140,000 less. The author suggests buyers who wait for rate cuts may overlook that saving, and that sellers may become less flexible once cuts look closer.
What it means for property investors
The arithmetic is simple, which is why it is persuasive. It compares an ongoing cost (extra interest each year) with a one-off difference (a lower price on the day of purchase). Those two things do not behave the same way over time. The comparison only holds if the price fall actually happens and the buyer can carry the loan until rates ease.
Several things sit outside the example. The story itself concedes that not every property is a bargain, and that values could still slide further. A lower price does not reduce the interest on a loan that is still large, and a buyer who holds through a longer period of high rates pays that interest for longer. Rates may also fall while prices rise again, as the author acknowledges, so the saving could shrink.
The story also makes observations without data behind them. It says more investors are appearing at open homes, and that buyers have been moving towards properties below $1 million where competition has eased. These are the author's observations, not figures, so they are worth checking against recent sales and listing data for the suburbs you are considering. The author also runs a real estate business, which is worth keeping in mind when weighing a sellers' market view against a buyers' one.
For investors, cash flow matters as much as price. Rental income needs to be realistic for the specific property, and vacancy periods reduce what a landlord receives. An independent rental appraisal gives a more reliable starting point than an estimate prepared by the seller or the selling agent.
What to look at next
Run the arithmetic on your own numbers. Work out the loan size, the rate you could realistically borrow at, how long you would hold, and what a price fall would mean for your equity. A licensed mortgage broker can talk through borrowing capacity and what a loan would cost in your circumstances.
Check the tax position with the right person. The story mentions federal tax changes affecting property investment but does not explain them. A registered tax agent or accountant can explain how any changes apply to your income and ownership structure. In Victoria, the State Revenue Office publishes information on land tax and vacancy-related charges, and the story's references to those taxes are worth checking there.
Test the market and the rent yourself. The article gives no vacancy rate, stock figure or rental data, so its view on housing supply is the author's opinion rather than a measured result. Look for vacancy and rental figures from a recognised source, and get an independent rental appraisal before relying on any income estimate.
If you want to test your own numbers against scenarios like these, book a free call and we can talk through the purchase with you. EWC is a property firm and refers any lending to licensed brokers. We do not arrange or approve loans.
General information only, not personal financial advice. Speak with a licensed adviser before acting.