The Australian property market has declined in value by 2.2% over the past twelve months. Maybe this poses a buying opportunity for some or a selling necessity for others.

The table below illustrates the change in property values over the past twelve months by capital city.

                                                                                                      Annual                                                        Median value

Sydney -5.6% $855,287
Melbourne -1.7% $703,183
Brisbane -0.9% $493,922
Adelaide 1.0% $438,466
Perth -2.1% $454,007
Hobart 10.7% $437,254
Darwin -4.0% $439,718
Canberra 2.3% $593,886
National -2.0% $552,141

Source: CoreLogic

The factors that may have contributed to this decline are:

  1. The Australian Prudential Regulatory Authority (APRA)

APRA has imposed higher lending standards on the banks. This has resulted in the banks being more prudent with their lending criteria. High risk lending to small business operators or first home owners has become tighter than it was prior to the regulation changes. This in turn has led to a fall in home loan lending by 3.8% over the past twelve months.

2. Foreign Investment

It has been estimated that over the past twelve months Chinese investment in residential property has declined by approximately 25%. This has resulted in less buyers in the market.

  1. Interest Rate

Recently three of the four major banks have raised their interest rates on their mortgages. This rise in interest rates have been linked to the increased cost of funding by the banks. Whilst the cash rate remains at historical lows in Australia at 1.5% the banks also source some of their funding from overseas where interest rates are rising.

So what does it all mean?

With rising interest rates, less overseas buyers and higher lending standards the ability to source finance will become more difficult which in turn will restrict property prices from rising.

This represents a potential opportunity for first home buyers, as they have the opportunity to save up a greater deposit and borrow less.

It also represents an opportunity for people over age 65 looking to downsize. If you are over 65 you can invest up to $300,000 of the sale proceeds into your super. This can result in a significant tax saving but also be mindful of the effect it may have on your Centrelink entitlements.

A more difficult period may be experienced by –

  1. Particular investors that have interest only loans. The banks are endeavouring to have these loans converted into principal and interest. This will inevitably mean that the repayments will increase but the benefit will not.
  2. Small business operators. The banks and other lending institutions will require more financial details before lending to small business operators, for example, three year tax returns with copies of the corresponding Australian Taxation Office tax assessment.


Should you require further information on property investment, please feel free to contact Peter Quinn by submitting an enquiry or calling us on +61 2 9580 9166.


The information in this document does not take into account your personal objectives, financial situation or needs and so you should consider its appropriateness having regard to these factors before acting on it.  It is important that your personal circumstances are taken into account before making any financial decision and it is recommended that you seek assistance from your financial adviser.