“Like steering a ship through a thick fog while trying to avoid obstacles”: navigating Australia’s housing market

Dr Woon-Weng Wong, Lecturer, School of Property Construction and Project Management 

Topics: interest rate rises, property market, mortgage stress 

“Property prices grew by approximately 25% over the pandemic so it's unsurprising that much of that growth ultimately proved unsustainable and the market is now correcting itself.”

“Despite the recent softening, the market is still significantly above its long-term trend and there are substantial headwinds in the coming months. Headline inflation is still red hot, and the central bank won't back down until it reins in these spiralling prices.”

“With the fuel excise ending, petrol prices will ramp up with many operators already capitalising on the opportunity. This will only feed inflation and further tightening of interest rates. These obstacles will continue to place downward pressure on house prices in the foreseeable future.”

“While falling house prices may seem like an ideal situation for those looking to buy, once the high interest rates, taxes and other expenses are considered, the true costs of owning the property are much higher.”

“People also must consider time lags in the rate hikes, which many are yet to feel to brunt of. It can take anywhere from 6 to 24 months before an initial change in interest rates eventually flows on to the rest of the economy, so current mortgage holders and prospective home buyers need to take this into account.”   

“It's a bit like steering a ship through a thick fog while trying to avoid obstacles. Not only must you avoid anything in your immediate path but you must be aware of potential obstacles much further down the line. And to complicate things, there is a lag between when you turn the steering wheel and when the ship eventually responds. So you can turn the wheel now, but the ship won't turn until much later.”

“Unfortunately, there is no magic rule as to when to enter or exit the property market.”  

“Those looking to buy, or stay, in the market should always do their homework and get their finances in order. People should seriously be evaluating their current and possible circumstances before jumping into the market just because of the drop in housing prices.

“You never know when an iceberg is going to appear and it’s too late to steer the ship away.”

Dr Woon-Weng Wong is a lecturer at RMIT University’s School of Property Construction and Project Management. He specialises in property market performance in Australia, Government policy and economic modelling.

Interviews: Dr Woon-Weng Wong, +613 99251726, woon-weng.wong@rmit.edu.au  

General media enquiries: RMIT Communications, 0439 704 077 or news@rmit.edu.au