Is the Property Market Going to Crash or Is Now the Right Time to Buy?

Article Highlights

• The Australian housing market is slowing in some capital cities, but Perth and undersupplied regions continue to see strong price growth due to chronic housing shortages.
• Interest rate rises are affecting borrowing power, yet underlying demand still outweighs supply in most markets, reducing the risk of a broad property market crash.
• Deciding to buy now or wait should be based on your personal finance situation, long-term goals, and local market conditions, not media headlines.

You’ve probably seen the headlines. Every second article about the Australian property market seems to scream doom, and it’s enough to make anyone looking to buy an investment property freeze mid-search. So, should you buy a property or wait it out?

The short answer: it depends on your circumstances, not the noise. Let’s break down what’s actually happening in the Australian housing market, what’s driving the chatter, and how to make a smart decision for your situation.

Is the Australian Property Market Going to Crash?

Firstly, it’s important to understand what a property market crash actually means. In simple terms, it’s widespread forced sales, plummeting prices, and a collapse in demand. We’re not seeing that. Instead, we’re seeing a market that’s catching its breath after a few years of rapid gains.

For instance, in some expensive suburbs across major cities, price growth has slowed. High interest rates have lowered borrowing power, and mortgage stress is real for some homeowners who stretched themselves thin during the low-rate years. The Reserve Bank has signalled rates will stay higher for longer to manage inflation, and that’s cooling enthusiasm in pockets of the east coast.

In Perth and other undersupplied markets, housing stock remains tight, population inflows continue, and demand still outstrips supply. That’s kept prices rising and rental income strong, even as mortgage rates climb. However, even in stronger markets, buyers still need to think about the bigger factors that are affecting affordability and growth. At the moment, that’s interest rates as well as supply and demand.

High Interest Rates and What They Mean for You

Let’s talk about interest rates, because they’re the biggest concern for most buyers right now. The Reserve Bank of Australia has lifted rates for the first time since Nov 2023 to cool inflation, and that means higher mortgage rates.

If you borrowed at historic lows a few years ago, you’re probably feeling the pinch as your repayments climb. For new buyers, it means your borrowing power has shrunk, and you might not qualify for as much as you could have even a couple of months ago.

But here’s the nuance: high interest rates don’t automatically trigger a property market crash. They slow things down, sure, but they also filter out speculative buyers and reduce competition in some segments. For serious buyers with solid personal finance foundations, that can actually create opportunities.

The Current State of Supply and Demand in the Australian Home Market

Australia’s housing market is dealing with years of underbuilding. Construction costs have soared, labour shortages have slowed projects, and many developers are sitting on their hands waiting for better conditions. That means fewer new homes are hitting the market, and existing housing stock is being snapped up quickly in competitive areas.

In Perth, listings are sitting well below long-term averages. Time on market is often just days, and buyers are competing hard for anything that ticks their boxes. Interstate investors are also eyeing Perth for its relative affordability and strong rental income potential, which adds another layer of demand.

On the flip side, some outer suburbs in Sydney and Melbourne are seeing softer conditions. Mortgage stress is more common there, and a few more forced sales are trickling through. But these are localised pockets, not a systemic collapse.

The takeaway? If you’re looking in a market with strong fundamentals (low vacancy rates, population inflows, limited stock), waiting for a crash might mean waiting forever. If you’re eyeing a softer market, you might have a bit more breathing room to negotiate.

Should You Buy Now or Wait?

Finally, this is the million-dollar question, and there’s no one-size-fits-all answer. Here’s what to consider:

Your personal finance situation

Can you comfortably afford the mortgage repayments, even if rates tick up a bit more? Do you have a buffer for unexpected costs? If your budget is already stretched, it might be worth waiting until you’re in a stronger position.

Your long-term goals

Are you buying to make it your home, or as an investment property? If it’s a long-term hold, short-term market wobbles matter less. Property investment is a marathon, not a sprint, and most of the gains come from time in the market, not timing the market.

The local market conditions

Is the area you’re looking at undersupplied or oversupplied? Are prices still rising, or have they flattened? A buyer’s agency can help you cut through the noise and understand what’s really happening on the ground.

Your risk tolerance

If the idea of buying now keeps you up at night, that’s a sign you might need more time. But if you’re worried about missing out while you wait for a crash that never comes, that’s worth weighing too.

One thing we see time and again: buyers who wait for the “perfect” moment often end up paying more later. Markets don’t crash on cue, and when conditions do soften, it’s usually in areas you wouldn’t want to buy anyway.

Make the Right Call With Professional Guidance

If you’re ready to buy, have your finances in order, and you’re looking in a market with strong fundamentals, waiting for a crash could cost you more in the long run. If you’re not ready or you’re eyeing a softer market, take your time and get your ducks in a row.

At You&Me Personalised Property Services, we work with buyers across Perth, Brisbane, Melbourne, Sydney and beyond to cut through the noise and find the right property at the right price. If you’re ready to talk through your options, contact us. We’re here to help.