Rates, conflict, cost of living: How to buy property when nothing feels certain

By Jarrod McCabe

Property markets move in cycles, and every cycle produces periods where sentiment turns negative. 

High interest rates, persistent cost of living pressures, conflict in the Middle East and broader global instability are potent signs of uncertainty – and Melbourne’s property market has not been immune. If anything, the uncertainty has only added to subdued sentiment that has persisted over recent years.

But flat markets are not the same as predictable markets. Stock thins out as discretionary vendors sit on their hands, competition concentrates in unexpected pockets, and the gap between genuine value and simply cheap, widens. If you’re looking to buy in these conditions, the opportunity is real – but only if you approach it with discipline. 

Here are the key considerations to get it right.

Start with your objective

Before anything else, be clear about the purpose of your purchase. 

Are you buying an investment property focused on growth, or is yield more important? 

Are you upsizing, downsizing, or looking for a lifestyle property – a weekender by the coast or a tree change?

Don’t let perceived value distract you

In uncertain markets, buyers can get sidetracked by what appears to be good value without checking whether the property actually meets their brief. 

If you’re upsizing, make sure the new property genuinely delivers what you need – the extra bedroom, the second living zone, the en suite – not just a superficial upgrade that looks appealing on the day. 

If location is the driver, confirm the specifics: are you in the right school zone, close enough to public transport, within walking distance of the beach if that’s what matters? 

Asset selection is always important, but it’s especially easy to lose discipline when prices feel softer and the temptation to grab a bargain takes over. If something looks cheap, it usually is for a reason – even in an uncertain market.

Be patient – stock will be thinner

Buyers in flat markets rarely anticipate the fact that while they’re eager to purchase at what they see as the bottom, no vendor has ever said to us that they want to sell in a flat market. 

Discretionary vendors sit on their hands and wait. That means the pool of quality stock shrinks, and the temptation to compromise on your brief intensifies.

Patience is critical. You need to be able to differentiate between a property that represents genuine value and one that’s cheap because the rest of the market isn’t interested. These are very different things, and the distinction matters enormously for long-term outcomes.

Assess value properly

Technical value

The fundamentals don’t change just because sentiment has softened. Assess the property against the standard characteristics: location, land size, orientation, building style, condition and – for apartments – parking. Compare these against recent sales of similar properties.

One practical consideration in a flat market: if you’re struggling to find current comparable sales, you’re generally better off going further back in time rather than further out geographically. 

Because the Melbourne market hasn’t moved dramatically in recent years, older sales can still provide a reasonably accurate reflection of value. Broadening to different suburbs introduces too many variables.

Market sentiment

Understand that sentiment varies significantly by sector. An inner-city apartment in an older block may have limited competition, while a family home in certain price brackets or locations could still attract multiple bidders. Don’t assume the entire market is flat just because parts of it are.

The best way to gauge sentiment is to observe auctions for similar properties. Look beyond the sale price – count the number of bidders, assess the depth of competition, and note where the final price lands relative to the quoted range. This gives you a far more accurate read on what to expect when it’s your turn.

Set realistic expectations

It’s natural in a softer market to feel like you’re in the box seat and can dictate terms. To a degree, the balance of power does shift toward buyers. But you still need to be prepared to pay a fair price. If you’re not prepared to, you risk losing the right property through overconfidence.

Use the technical value work and sentiment observations to set your limits, then back yourself. Being prepared to pay fair value doesn’t mean overpaying – it means being positioned to act decisively when the right property presents itself.

Know how to buy at auction

Before the hammer falls

Don’t assume a flat market means you can control the auction with small incremental bids. The auctioneer has the right to reject any bid they deem unacceptable. Make reasonable bids and put yourself in a strong position.

If the property passes in

If the property doesn’t reach the vendor’s reserve and it’s within your budget, make sure it passes in to you. This gives you the first right to negotiate exclusively at the vendor’s reserve price. 

You don’t have to accept that price – most agents and auctioneers will negotiate in good faith until either an agreement is reached or both parties reach an impasse. But legally, the vendor is under no obligation to keep negotiating. 

Have your comparable sales ready and know your building inspection inside out, so you can negotiate from a position of knowledge.

Take home message

Uncertain markets reward disciplined buyers. Be clear on your objective, patient in your search, rigorous in your value assessment and realistic about what you’ll need to pay. 

Don’t confuse a flat market with an easy one – quality properties still attract competition, and the buyers who succeed are those who’ve done the work and are prepared to back themselves when it counts.