Homeowners’ strong position will help in softer conditions – John McGrath

When you’ve been in real estate for as long as I have, the latest Cotality data isn’t surprising. After all, property is a long-term game where the market is subject to several cycles along the way.

That being said, I empathise with property owners’ uneasy time right now. Not only has the Reserve Bank of Australia (RBA) increased interest rates three times this year, but high petrol prices due to the ongoing Middle East conflict are exacerbating cost-of-living pressures.

Does this mean potential buyers shouldn’t purchase a home or owners should sell their property? Not at all.

But I would encourage these people to study the long-term effects of pressures and downturns on the property market over several decades, not just a few years.

Doing this will definitely help both possible buyers and current owners remain calm and not be deterred.

In a similar way, Cotality research director, Tim Lawless, recently explained how these two groups are facing both bad and good news at the moment.

The latter was noticeable in Cotality’s latest Monthly Chart Pack, which showed that median dwelling values rose quite strongly across the year in our capital cities. But even so, Australia’s property market is on the cusp of a housing correction, as interest rates and serviceability pressures, along with affordability, take hold. As a result, we’re seeing softening demand and more listings

But he adds – and I agree – that home owners should survive this reset better than they think, thanks mostly to the strong, recent growth in home values.

Cotality emphasises that this has left most homeowners in a relatively strong equity position, so a material pick up in distressed sales or mortgage arrears is unlikely. Plus, as this latest data pointed out, mortgage arrears at the end of 2025 were still lower than the record high in mid-2024, when interest rates were similar to what they are now.

The best news, however, is that Australia’s housing downturns are both relatively few and short-lived. According to an analysis of Cotality’s monthly Home Value Index, our combined capital city markets have recorded just 10 of these corrections over the past 40 years. And, almost every individual capital city decline in this period lasted less than a year.

Mr Lawless did express some concern for recent buyers, who may not have had years to accrue value on their home or pay down its principal. They could therefore be at risk of experiencing negative equity, as home values drop. First-home buyers may also have purchased with a small deposit via a government deposit scheme.

Helping these and other buyers though is the focus that they place on mortgage repayments. As a result, Mr Lawless believes borrowers are more likely to adjust spending in other areas of their life, rather than ending up in mortgage arrears.

While I don’t deny it’s a challenging time to be a home owner, or buyer, it’s crucial to look beyond short-term statistics. By all means, study this data but also explore long-term housing declines and growth, and how these impact the market – and may affect you and your family.

Make sure you have a financial buffer for your mortgage repayments and be prepared to cut back in other areas if you need to.

More than 40 years in real estate has taught me that the property market consistently rises and falls but even when it declines, it always normalises again.