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[Podcast] How steeply will house prices fall after this boom? With Brett Warren

[Podcast] How steeply will house prices fall after this boom? With Brett Warren
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Can property prices really keep rising considering where they are today? My Podcast #325 Brett Warren3

And how much are property prices likely to fall once this cycle comes to an end?

These are some of the questions Brett Warren and I are going to discuss in today’s podcast

To do this we are going to look back at history and see what we can learn from the past 50 years of economic and property price changes and what has driven them to help give you some clarity on what’s ahead for our property markets and the value of your and my home.

What history tells us about what’s coming?

It’s interesting how the narrative in the media has changed – only a few months ago it was about a booming property market and now the media is full of questions about how long this boom can last and how far property values are going to fall once it’s over.

Can property prices really keep rising?

The simple answer is yes property values can keep rising, but not everywhere and not to the same extent as they have over the last year.

What’s going to happen to property prices in the short term? Will they fall after this boom ends?

While property prices are notoriously difficult to forecast, in my mind it’s hard to see the same size downturn befalling the current market, at least in the near term.

Let’s look back and see what we can learn if I look back on close to 5 decades of investing, and see what may be ahead.

  • In 1970, the median Sydney house price was $18,700
  • The median price in Perth was a relatively $17,500
  • In Melbourne, the median price was just $12,800.
  • In 1971, house prices were $11,900 in Adelaide
  • They were $18,000 in Canberra
  • They were $11,875 in Hobart
  • The earliest data for Brisbane is for 1973 when the median house price was $17,500.
  • In 1965, the unemployment rate was 1.3 percent
  • For the period from 1964 to 1971, the unemployment rate was 1.9 percent or lower.
  • In both 1974 and 1975, annual inflation was over 15 percent
  • From 1973 to 1983, inflation averaged 11 per cent per annum.
  • So why has inflation been so low for the last decade or more?
    • Firstly, unionised labour is now a fraction of what it used to be.
    • Second, the world has been investing heavily in technology and in particular, automation for the last decade.
    • Thirdly, globalization. Open trade has also led to higher rates of immigration.
    • Four, immigration. There is little doubt that a high level of immigration, especially when a large proportion of the migrant influx is looking for work, limits domestic wage growth.
    • Five, Long Covid #1. We see a repeat of 2021, being that we remain constrained due to new Covid mutations. We spend less when we are locked down

What about affordability?

There are a number of affordability measures used and most of them are not very useful

  1. Ratio of dwelling values to income – this is the most widely used and internationally comparable method
  2. The number of years it takes to save a 20% deposit
  3. The proportion of household income required to service a new mortgage
  4. The proportion of household income required to pay rent

So, on the one hand, it is difficult to get into the property market at present, and I know I’m going to annoy some people, but it’s not just an issue of affordability – it’s also an issue of expectations. Some young millennials are expecting to start their property journey in the type of house it took their parents to 30 or 40 years to acquire

What about mortgage stress?

In my mind, the best measure of mortgage stress is home loan arrears or home loan defaults. Currently, home loan arrears (those more than 30 days late) are only 1.14%

Is there really a debt bomb waiting to blow up?


  1. We have a stable banking system.
  2. We have jobs and Income security
  3. We’ve stashed our cash and most households are better off financially than before the pandemic.

So what’s likely to happen to property values in 2022?

I see house prices growing more slowly in 2022 and then the market peaking around in 2023 or whenever APRA or the Reserve Bank intervenes. 2022

In general, I agree with the latest house price forecast of the big banks suggesting that property values may increase around 6 to 8% in 2022.

If our economy picks up as well as the RBA hopes it will, and if we get the 200,000+ migrants coming to Australia next year, and a big if is if that if there are no more major variants to Covid, our property markets could perform even better than that.

At the same time our rental markets, which are currently very undersupplied, will experience strong rental growth.

However, as we said earlier, moving forward they will be a two-tier property market where properties in the lower price brackets and some of the regional areas will become affordable to the locals and therefore not increase much in value.

So don’t count on the rising tide lifting all ships.

Links and Resources:

Michael Yardney

Brett WarrenNational Director Metropole Property Strategists

Get the team at Metropole to help build your personal Strategic Property Plan Click here and have a chat with us

Some of our favourite quotes from the show: Recession Australia Note Money Economy Squeeze Tighten Save Saving Budget Cut 300x200

“It’s unfathomable unthinkable how our economy and how our cities and how our society has changed in the last half a century.” – Michael Yardney

“Demography moves slowly – you can see as people change through their stages in life what their requirements are going to be.” – Michael Yardney

“Most households in Australia are better off financially than before the pandemic.” – Michael Yardney


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Michael is a director of Metropole Property Strategists who help their clients grow, protect and pass on their wealth through independent, unbiased property advice and advocacy. He's once again been voted Australia's leading property investment adviser and one of Australia's 50 most influential Thought Leaders. His opinions are regularly featured in the media.

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