A soft market is an adjustment, not a failure
LJ Hooker head of research Mathew Tiller said agents will have to continue educating their clients, as a drop in prices was not unusual for the property market and was part of its cyclical nature.
“They are a normal part of the adjustment process and have occurred many times before,” Tiller said.
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“The key is to look beyond a single month’s data and understand the broader cycle. Short-term movements can feel dramatic, but the longer-term data provides a much clearer perspective.”
He said the cycle of the property market rising, pausing, softening, then recovering was not a flaw, but simply the way it worked.
While market confidence had been significantly impacted in recent months, Tiller said the current market deserved consideration, not panic.
“Some parts of Australia are cooling after a strong run. Others are still being supported by population growth, tight housing supply, limited stock and relative affordability.”
“It does not mean the market is failing but rather adjusting, which is exactly what property markets have always done.”
What is driving the current market’s cycles
Tiller said while property market cycles were a common occurrence, each was shaped by its own unique economic conditions.
He said the main factors influencing the property market of today were heightened interest rates, stretched affordability and proposed changes to property tax settings.
“These factors are changing buyer and investor behaviour, and some markets may experience larger corrections than others,” he said
“The important thing is not to assume every market will perform the same way – Australia is not one property market.”
While national data could help explain broader trends, Tiller said local market knowledge is what would help people make better decisions.
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A boon for buyers
Tiller said that a softer market could create opportunities for buyers, who would have more choice, time to make decisions and greater strength to negotiate than when property prices were on the rise.
“More choice can be valuable, particularly after a period where many buyers felt they had to move quickly or risk missing out.”
“But trying to perfectly time the bottom of the market is incredibly difficult, but by the time it becomes obvious the market has turned, competition has often started to return.”
Instead, Tiller said buyers should focus on securing the right property that fits their budget, their needs and long-term plans.
“Short-term price movements matter, but they should not be the only factor driving the decision.”
A selective market for sellers
According to Tiller, just because a market softens doesn’t mean it inherently becomes a bad time to sell.
Despite the softening conditions, Tiller said that people continued to need to purchase property, and the biggest change came in buyer behaviour.
“In a strong market, buyers often chase prices. In a softer market, vendors need to meet the market.”
“The strongest results usually come from understanding today’s conditions, not chasing yesterday’s prices.”
Tiller said the best way to achieve a strong result in a slower market was to use realistic pricing, quality presentation and a well-planned marketing campaign.
