Will the property market ever crash?I started ProSolution almost 20 years ago and if there’s been one common theme over that time, it is how “expensive” property is. This theme can be expressed in many ways such as predictions of property market crashes, housing affordability “crisis”, comparison of Australian property prices to other parts of the world and so forth. This noise is often unhelpful for property buyers.
The reality is that property has always seemed relatively expensive. And it’s probably never going to change. You must get used to it and learn to make prudent decisions despite the prevailing property price rhetoric.
I felt ill after almost ever property I’ve boughtIn December 2006, I engaged Richard Wakelin to select and purchase an investment-grade property. He ended up buying a single-fronted Victorian cottage on a small block (146 sqm) in Prahran, Melbourne for $723,000. It was a record price for that street (the street is lined with similar Victorian cottages) and probably suburb. Paying a record price didn’t feel satisfying. In fact, it gave me indigestion. J But I trusted that buying an investment-grade asset that possessed sound fundamentals will work out well in the long run.
This property last sold in August 2019 for $1.362 million[1] (unfortunately, I had to dispose of it as part of my marriage separation in 2012). That makes the price in 2006 seems relatively cheap today.
Government policy supports property prices, and probably always willThe government’s policies have always supported property values. Of course, we can argue about the merits of this. And I think there’s a strong case to argue that the government shouldn’t interfere with the property market. But the reality is, they always have, and probably always will.
There are several examples of this including taxation incentives like negative gearing, Rudd governments doubling of the First Home Owners Boost in 2008 in the middle of the GFC, federal government asking the banks to provide loan repayment pauses last year and so forth. As soon as the property market has some challenges, the government always steps in.
There are two realities to acknowledge. Firstly, falling home values are bad for the whole economy. They impair consumer confidence and therefore consumer spending, and that deteriorates the whole economy.
Secondly, the

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