Three things you should know about the Australian property market

Your property market outlook and insights

6 minutes reading

Some of the greatest investors of our time have made and saved wealth against the odds – through market dips, history-making events, and periods of rapid change.

Though they’re often dealing in complex territory, their collective wisdom is relatively simple: stay calm when there’s panic, understand what you’re investing in, and make decisions that align with a long-term strategy. These age-old adages should ring true for homeowners, or homeowner hopefuls, when it comes to the Australian property market at the moment.

Here, we share what’s happening in the market, what to expect in the months ahead, and the lessons from history that can help you stay focused on your long-term goals.


Property prices: an outlook

The property market in Australia is characterised by periods of price growth, stagnation and decline. At the moment, it’s in a period of decline and has been for several months. 

So far, the story has been different across our states and territories, which is important to keep in mind in the context of a buying or selling decision. For example, cities like Sydney that had larger price gains in recent years are now experiencing bigger falls than other state capitals, such as Brisbane.

Regional and metropolitan areas have also had different experiences to date, with some regional areas experiencing relatively quick price falls after a heightened period of demand throughout the covid lockdown period.

As it stands, property prices look set to continue falling for the coming months.

"At the national level we are expecting a peak-to-trough fall of around 15%, a bit larger in Sydney and Melbourne as usual, and a bit less in the other capital cities,” says Justin Fabo, Senior Australian Economist, Macquarie Group.  

For buyers, market dips might present an opportunity to buy at a lower price point. For homeowners, price volatility can be understandably stressful, but it’s important to remember that price gains are often realised in the long-run.

“History teaches us that volatile conditions don’t last forever,” says Pratham Karkal, Head of Personal Banking Direct at Macquarie’s Banking and Financial Services Group.

“If you look over, say, the last 30 years of history – you would see that asset values have increased.1 The lesson here is that when you’re buying, when you’re investing, take a long-term view, because part of owning a property is experiencing price highs and lows.”

Find out more: 4 things investors should consider as the economy slows



Interest rates: where to from here?

The cash rate is one of a range of factors than can contribute to price gains, and price falls, in the Australian property market – making it important to monitor in the coming months. At the moment, the cash rate looks set to continue rising into early 2023.

“We think most of the heavy lifting in terms of raising interest rates has been done in Australia. They’ll go a little bit higher from here, into early next year, is our central case,” says Fabo.

As the cash rate rises, Karkal says he has seen borrowers finding the balance between being cautious and savvy with their finances.

“What we are seeing among customers is that borrowers are being sensible about what might happen if rates go up further and how they would respond, which is a good thing,” he says. “Some are also seeing that this stage of the property market cycle is presenting opportunities for them and are exploring if they are in a position to capitalise.”

Thinking for the long-term is important in your attitude to both the property market and your finances. Though we haven’t been in a rising cash rate environment since 2010 in Australia, historically, the cash rate fluctuates over long periods of time. For example, some may recall the high rate environment of the early 1990s, when the cash rate reached 17.5%.

“When you think about your long-term goals with your finances, think ‘what if,’” says Karkal. “What if interest rates go up, or my circumstances change? Is my home loan flexible enough to support that, are its features designed for the long run?”

Find out more: A guide to managing your finances in 2023


Lessons from history: the value in patience

One of the key proof points that property is a long-term investment is the price gains in the residential market over time. Nothing can predict the future, but homeowners might be reassured by the overall tendencies of the property market throughout history.

For example, while there have been periods of growth and falls, dwelling values nationally have increased 382% over the past 30 years. In annual compounding terms, that’s a rise of 5.4% on average since July 1992, according to data from research house CoreLogic.2

“Forecasting where housing trends are going is hard enough over the short-term, let alone over the next 10, 20 or 30 years. However, the long-term cycles can teach us a few things about the future of the market,” a CoreLogic piece says.

“The decline trend we are seeing at the moment will eventually level out, typically followed by a period of stability then further growth.” 

Another observation is that the state of the economy tends to impact the growth stories of residential markets in Australia. This includes key factors such as income growth and the cash rate.

“For example, if we use history as a guide, the rate of decline in dwelling prices keeps speeding up until mortgage rates stop rising. Then in the past, when mortgage rates have stopped rising, the rate of decline in dwelling prices starts to slow,” says Fabo.

Again, while there’s no way to predict the future, the residential property market is influenced by factors that can vary and fluctuate over time. The reassurance in this, particularly for those who are concerned by short-term volatility, is that no single point in the cycle will last forever.

Takeaways and toolkit

  • Periods of price growth and decline are a regular part of the Australian property market. At the national level, the market is currently in decline, with further price falls expected to come.  
  • The cash rate is one of a range of factors that can impact the property market and the interest rate on your home loan. It looks set to continue rising into early 2023, though the pace has slowed in the October quarter.
  • Short-term volatility shouldn’t distract from your long-term goals. The property market has produced price gains over time, which is important to consider in the context of any buying or selling decision.

Additional Information





This article has been prepared by Macquarie Bank Limited ABN 46 008 583 542 AFSL and Australian Credit Licence 237502 (‘Macquarie’). It doesn’t take into account your objectives, financial situation or needs, nor is it intended as a substitute for any accounting, tax or other professional advice, consultation or service – please consider whether it’s right for you. Nothing in this article shall be construed as a solicitation to buy or sell any financial product, or to engage in or refrain from engaging in any transaction. 

The information is current as at November 2022. No representation or warranty, express or implied, is made regarding future performance. Examples are included for illustrative purposes only. Actual performance may depend on numerous factors, including changes in economic conditions and tax legislation.

Any opinions expressed in this article are subject to change without notice. Macquarie accepts no obligation to correct or update the information or opinions in it. No member of Macquarie accepts any liability whatsoever for any direct, indirect, consequential or other loss arising from any use of such information.