Are you a Braveheart?

Peaking Australian home prices have made some real estate buyers nervous about putting big chunks of money into something that might soon lose value.

Halfway through March, the latest data from CoreLogic shows home values for the five biggest capital cities were flat for the month. And Sydney and Melbourne didn’t do much in February, either.

There’s a growing chorus of commentators calling the top of the market, while others say buyers are still clamouring to get their foot in the door.

It requires bravery to spend hundreds of thousands of dollars, and more than a million in a growing number of areas, on something that’s value may well go backwards over the next year.

Early this month a RateCity analysis of Commonwealth Bank forecasts pointed to median home price falls by late 2023 across all capital cities. The projections range from $38,000 in Adelaide to $41,000 in Hobart, $42,000 in Brisbane, $98,000 in Melbourne and $146,000 in Sydney. But there’s a sure-fire way to be brave in this environment, and you don’t have to put on blue face paint, a kilt and Mel Gibson’s Braveheart Scottish-with-a-hint-ofMad-Max accent. All you have to do is think in terms of 10-year timeframes. I’ve never found a period in any capital city where house prices didn’t rise over a decade, and borrowers should remember that the stellar price growth of the past two years is not normal. We’ve had record low interest rates, a pandemic keeping people focusing on home rather than jetsetting overseas, and huge wads of state and federal government stimulus money flowing into households. That’s a recipe for growth in anyone’s books. But if rates rise sharply (as some are predicting), the economy gets hit by soaring global inflation, people start losing jobs and war fuels further gloom – that’s a recipe for house price haggis (Scotland’s famously unappealing national dish) instead.

But if you can buy and hold for 10 years, you will almost certainly come out on top in the property game. Nobody really knows if we are heading for heavy falls anyway. The Commonwealth Bank predictions may seem scary, but the CBA also forecast potential falls up to 30 per cent when Covid first hit in 2020.

It’s been sunshine and lollipops since then for anyone lucky enough to own real estate. And there are other factors that could underpin our property prices.

Australia has had no immigration for two years, so we’ll soon have hundreds of thousands of new arrivals chasing the great Aussie dream of home ownership.

We are also seen as a safe haven from all the upheaval in Europe, which is a reason why the Aussie dollar has climbed during the Ukraine crisis and demand for our commodities is surging. Nobody can predict the future, but focusing on the long-term will deliver property owners something every Braveheart wants for their financial future: Freeeeeedommm!