Property prices in Australia have dropped slightly over the past 12 months, although the estimated percentage change depends on who is gathering the data. According to the Australian Bureau of Statistics, prices across Australia fell by 3.3 per cent in 2008, whilst Australian Property Monitors report an 8 per cent price drop. Either way it’s obvious that prices are moving down and not up, and this is often regarded as “bad news” in the media.
Does it really matter if prices drop?
If I’m selling my home, and the price is down, say, 10 per cent on what it was worth at the end of 2007 (after climbing 20 per cent in that year), and if I’m buying a home that is also worth 10 per cent less than what it was a year ago, then everything seems pretty fair and even.
It’s no big loss. Life goes on. And more people, especially first home buyers, are finally gaining ground on being able to buy a home.
So I put it to you, wise reader, does it matter if property prices fall? Will falling property prices mean you are more or less likely to buy a home, or does it not matter?