When a Softer Market Favours Upsizers

A falling property market is usually framed as bad news for homeowners. Values decline, confidence weakens and sellers become more conscious of what their property may have been worth six or twelve months earlier.

But for someone looking to upgrade their principal residence, focusing only on the value of the property they already own can lead to the wrong conclusion.

We recently worked with a Sydney family considering an upgrade. Their concern was understandable. If their existing home had fallen in value, had the opportunity to make the move become worse?

The answer depended on what was happening on the other side of the transaction.

The gap matters more than the headline

An upsizer is effectively participating in the market twice. They are selling one property and buying another, usually at a higher price point.

That means the important question is not simply “What has my home lost in value?” It is “How has the gap changed between the property I own and the property I want to own?”

That distinction becomes particularly important when different parts of the market are moving at different rates.

Cotality’s August Housing Chart Pack shows exactly that occurring in Sydney. Over the three months to July, Sydney’s lower quartile declined 1.4%, the middle of the market fell 3.4%, while the upper quartile declined 5.2%.

For an owner moving into a more expensive segment, that relative movement can matter considerably more than the decline in their existing property’s value.

Less competition changes the equation too

Price is not the only consideration. Current conditions are also giving buyers something that can disappear quickly in stronger markets: time and negotiating leverage.

Sydney homes took a median 41 days to sell in the three months to July, compared with 34 days a year earlier. Sydney’s median vendor discount also widened to 4.2%.

We are seeing the practical effect of that on the ground. Competition at open homes remains relatively subdued, and buyers can often assess opportunities without the same pressure to make an immediate decision.

For an upsizer, that can make the process of securing the next home materially different.

This does not mean every upsizer should act

A softer market is not automatically an opportunity. The quality of the property being purchased, the realistic value of the existing home, the financial implications of the move and the family’s longer-term objectives still need to stack up.

But waiting for the market to recover simply because the value of your existing home has fallen can overlook what is happening to the property you ultimately want to own.

For this family, the exercise was not about trying to predict where Sydney prices would go next. It was about understanding their position relative to the next property.

That is the more useful way for an upsizer to assess the current market.

Considering an upgrade?

We can assess both sides of the move before you make a decision, including your likely sale position, the market you are moving into and whether current conditions genuinely improve the opportunity.