According to the big boss at the RBA, property prices in Australia may decline, but they won’t crash like they have in the USA and elsewhere:
“Indeed, prices probably are falling – gently. But I think there are enough differences in the US versus Australia dynamic between the US. We certainly shouldn’t assume there is going to be a crash but some combination of a general decline in prices and gradual growth of income (was expected).”
– Reserve Bank governor Glenn Stevens
I think he’s right. What I’m seeing is that house prices are slowly falling, but not by too much. It’s a ‘soft landing’ rather than the bursting of the housing bubble. Prices do need to fall to bring them back in line with current income levels, and as Alex Brooks from domain.com.au points out, falling property prices can have a really positive impact:
“The value of owning a house is that it meets our need for security and shelter — it was never meant to be an “investment”. Rapidly rising property prices kill people’s dreams of housing security, so surely an unravelling of high prices is for the benefit of most people?”
If you’re buying and selling in the same market, falling property prices shouldn’t matter, and as I’ve argued elsewhere, they certainly shouldn’t put you off from buying a new home.