HOW CAN CHEAPER HOMES BECOME HARDER TO BUY?

Now, look, tell us what's happening.

How can property prices fall while housing becomes less affordable?

Well, welcome to the great Harry Houdini housing vanishing trick, guys, where house prices shrink, your borrowing power disappears, and for the grand finale, the bank pulls a declined pre-approval out of your empty wallet.

So the answer is that house prices are only one piece of the puzzle because higher interest rates are shrinking our borrowing power faster than prices are falling while still raising our loan repayments.

And at the same time, our higher living costs are attacking deposit savings like seagulls and hot chips.

So houses may be cheaper, but the finance bridge is actually narrower, which means a cheaper house you can't finance isn't more affordable.

It's just a bargain sitting behind the bank's locked door.

Okay, and so off the back of what you're saying there, are we measuring affordability wrongly by focusing so heavily on the actual prices? Mm-hmm.

Yeah, I think we are, guys.

I think we're caught in sticker price syndrome where we're pricing the front door but ignoring the financial furniture behind us.

And according to a recent housing affordability report, a typical $125,000 household income can only afford about 12% of current homes, which is down from 43% five years ago or a 75% decrease.

So if you're only looking at the sticker price, you're left buying what I call a mortgage mullet.

So short and cheap at the front, but ugly and painfully expensive at the back.

Yeah,

yeah.

So, you know, and that isn't a property ladder.

That's a fire escape with most of the rungs missing and a queue at the bottom, guys.

We shouldn't be surprised that Mullet's been worked into Bushy's chat, have we? It's only been a matter of time, I suppose.

Now, look, Bushy, does all of this, you know, create an opportunity of sorts or is it another locked door?

Well, both, actually.

You know, for the unprepared, it's a bit of a locked door, but for the finance ready, it's actually a rare open window.

Now, totalities revealed that days have fallen across 93% of capital city suburbs through the winter, which sounds scarier than a bank day with a tape measure and no sense of humour, but more stock and motivated vendors mean more choice, less auction elbows and more negotiating room.

And in our past hot market...

FOMO paid the seller but in our softer market now homework pays the buyer which means if you know bringing a pre-approval a buffer and patience to scarce livable property with resilient demand is an opportunity so we don't need to nail the bottom just be ready while others are freezing but the bargain bin still contains broken toasters guys and some of them are balconies so use softer prices to buy better not simply cheaper because if the deal needs smoke mirrors and a disappearing deposit.

That isn't property magic.