During 2020 and 2021, we saw the perfect storm for property price growth.
There was strong demand for larger homes, historically low interest rates (effectively free money), and buyers armed with significant borrowing capacity — all layered with a level of FOMO that we hadn’t seen before. The result was phenomenal price growth and what I now refer to as the price cliff of 2022.
In May 2022, the Reserve Bank of Australia implemented the first interest rate rise since 2010. What followed was a rapid series of increases, which saw those extraordinary results begin to reverse. Some reports suggest Melbourne experienced a decline of approximately 8% in 2022 alone, followed by a partial recovery through 2023 and 2024, and a more subdued, flat to slightly declining market through 2025 and into 2026.
More recent interest rate rises aside -- this context is important when we are advising clients today.
It is not uncommon for us, as buyers advocates, to be presented with properties that were purchased during 2020 or 2021 at peak market conditions. As interest rates have increased and many of these owners have transitioned off fixed-rate lending, the change in repayment levels has, in some cases, placed them under financial pressure. As a result, we are now seeing a number of these properties return to the market.
While there is a human element to this — and we are always mindful of the position vendors may be in — our role is to ensure our clients purchase the right property and, equally importantly, at the right price. We have recently acted on behalf of clients in multiple transactions where we have secured properties at prices below what the vendors originally paid at the peak of the market.
These outcomes are not achieved through aggressive negotiation, but rather through a considered approach. In each instance, the vendors required time to observe how the market responded to their campaign and to recalibrate their expectations based on genuine buyer feedback. Allowing the market to provide that feedback is a critical part of the process.
We have also seen a number of properties presented to us off-market that were purchased prior to the 2022 price correction, often positioned at or near their original purchase price. While the absence of competition can be appealing to some buyers, it does not inherently justify a premium. In these situations, it is important that buyers remain disciplined and make decisions based on market value rather than perceived opportunity of avoiding competition or an auction. Having an experienced advocate who understands that vendors need to observe the true market to recalibrate their expectations and ensures that clients are not drawn into overpaying simply to secure an off-market transaction.
Understanding the impact of the 2022 price correction — and where the market sits today relative to that peak — remains a key consideration in how we approach negotiations in 2026.
It is not simply historical context; it is a practical tool that informs pricing strategy, vendor motivation and ultimately, the outcome we are able to achieve for our clients.
Further discussion on off-market opportunities and the real world dangers for buyers in my next blog.
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