Australia’s property market may be shifting in favour of buyers, but new research suggests many remain reluctant to take advantage, with interest rate uncertainty continuing to undermine confidence even as prices fall and negotiating power improves.
Research released by independent property valuation firm Opteon found that 61 per cent of respondents were less confident about buying, selling or holding property following the Reserve Bank’s September interest rate rise, while almost two-thirds identified further rate increases as a risk to the market over the next 12 months.
The findings come as the RBA begins its November board meeting, with its next interest rate decision due tomorrow, and fresh Cotality data showing national home values declined another 1.2 per cent in October, extending the downturn to seven consecutive months.
Opteon Managing Director Australia and New Zealand Scott Chapman said interest rate uncertainty was influencing market behaviour, potentially well before its full effects became evident in property prices.
“What we know from previous property cycles is that uncertainty can change behaviour quickly. Buyers become more cautious, sellers can hold back and activity slows. Those changes can happen well before the full impact is reflected in property values,” Mr Chapman said.
The Opteon survey, which included 347 property owners, investors, buyers, renters and industry professionals, found 64 per cent considered further interest rate rises a risk over the next year.
Yet despite the weakening outlook, 67 per cent believed current market conditions favoured buyers, compared with just 5 per cent who believed sellers held the advantage.
The figures point to a challenge for agents: while buyers increasingly recognise their stronger negotiating position, concerns about borrowing capacity and further price falls may be discouraging them from making purchasing decisions.
“Higher rates are making it harder for some buyers to borrow and giving others a reason to wait. When fewer buyers are competing for properties, homes can take longer to sell and sellers may need to adjust their expectations,” Mr Chapman said.
The findings come alongside the latest Cotality Home Value Index, which shows combined capital city dwelling values have fallen 8.1 per cent over seven months, with the pace of decline tracking faster than any previous downturn over the past 40 years.
National home sales over the past three months were also estimated to be 23 per cent lower than a year earlier, while Cotality reported that properties were taking longer to sell and vendors were accepting larger discounts.
The median time on market has reached 39 days, the highest since August 2020, while vendor discounting has increased to 4.7 per cent, its highest level since May 2019.
The combination of weaker buyer demand and rising available stock is placing greater importance on realistic pricing, effective buyer engagement and conversations with vendors about changing market conditions.
However, Mr Chapman cautioned against treating the national downturn as a uniform trend, noting that local supply and demand would continue to influence individual markets.
“What happens to values will still depend on the local market and the type of property. Areas where there is strong long-term demand and fewer properties for sale historically have held up better than markets where buyers have more choice.”
While the survey suggests buyers have gained negotiating power, Mr Chapman said attempting to identify the exact bottom of the market remained difficult.
“Current conditions may give buyers more choice and negotiating power, particularly those who were priced out when competition was stronger. But nobody can reliably pick the bottom of the market.”
He said buyers should instead focus on whether a property was affordable over the long term and suited their individual circumstances, rather than making decisions based solely on expectations about interest rates or future prices.
The findings reinforce the importance of providing clients with relevant local market information, particularly when national headlines may not reflect conditions in individual suburbs or property segments.
With the RBA’s next decision approaching, uncertainty over the direction of interest rates is likely to remain an important consideration for buyers and sellers.
Mr Chapman said property decisions should ultimately be guided by individual financial circumstances and local conditions rather than a single announcement from the central bank.
“Ideally, one rate decision shouldn’t determine whether someone buys, sells or holds property.”