Is Now the Time to Buy? Tom Panos on Property Market Bottoms, Rate Hikes, and Valuations

In this week’s episode of the Follio Property Podcast, hosts Reece Beddall and Lachland Delahunty are joined by renowned real estate expert and auctioneer Tom Panos to discuss the current Australian housing market. They break down market segmentation by price and geography, analyse borrowing serviceability against property values, and evaluate long-term investment opportunities.

Key Takeaways & Market Insights

• National Geographic & Price Segmentation: Property prices across Australia’s major capitals have dropped; higher-priced properties have been hit hardest, while Darwin remains an exception to the downturn. 
• Sydney Dropping More than Melbourne: Sydney’s property market started falling earlier than Melbourne due to rate hikes and is down further from a much higher baseline. Melbourne missed out on post-COVID growth and present value. 
• Buyers Should Avoid Borrowing Capacity Trap: Those waiting for property prices to hit the bottom could find that it costs them more in the long run because high interest rates reduce borrowing serviceability faster than asset values decline. 
• Unintended Impacts of New Policies: Government deposit schemes have increased the competition levels at the lower property price bracket, while economic strain has reduced parental financial support for those purchasing for the first time. 
• Dropping Property Prices Leading to a Drop in Discretionary Spending: The dropping property prices are impacting both local small businesses and state government stamp duty revenue as wealthy homeowners’ discretionary spending dries up.

How Are Capital Cities Currently Performing, and Where Are Market Dynamics Shifting? 

Tom Panos highlights that rate hikes and budget changes have triggered price drops throughout the capital cities, while pointing out that the Melbourne market is undervalued and positioned for recovery:

“Pretty much every real estate market is going down except for Darwin… Sydney and Melbourne started going down long before the budget. It was triggered more by interest rates, and that happened late in 2025.” – Tom Panos

“I think the chart means that Melbourne is undervalued. It does not make sense to have Sydney, Brisbane, Perth, Adelaide, then Melbourne… Melbourne hasn’t gone up as you’ve said, catch up, new government, buy a house there for 700 grand, and it’s not in the middle of nowhere.” – Tom Panos

Why Waiting for the Property Market Bottom Is Risky for Prospective Property Buyers?

Tom Panos mentions that timing the absolute bottom of a market cycle is unrealistic for investors and that lower competition can create immediate buying opportunities:

“I don’t look at buying at the bottom of the market. There’s no bell that rings at the bottom of the market. All you’re trying to do is buy well… To me, prices have gone down, rents have gone up, and there’s less competition, right? Good times for an investor, actually.” – Tom Panos

Tom Panos goes on to explain the mechanics of rate increases, demonstrating how shrinking loan capacity can often outpace property price drops:

“Borrowing capacity often drops at a faster speed than property prices, which means that it becomes unaffordable… So what I’m saying is you’ll probably get more money from the bank today than what you will in a few months’ time.” – Tom Panos

How Are Government Policies and Rate Hikes Impacting First-Home Buyers and the Wider Economy? 

Tom Panos details that government deposit assistance programmes such as the first homeowners deposit scheme have accidentally intensified buyer competition at the lower price points of the property market in capital cities:

“The 5% deposit scheme and the 2% deposit scheme have actually meant that there are buyers there at the lower price point in all capital cities. You end up having this competition at the price point that you wanted {to buy in}.” – Tom Panos

Tom Panos goes on to explain the broader consequences that falling property prices have on homeowners and their general spending: 

“When someone is feeling wealthy, they invest in things, they put stuff in their business, they buy things, and they keep the economy going. But when you tell them, ‘Hey, listen, you’re poorer…’ they go inward. You disconnect. And you don’t spend.” – Tom Panos

What Is the Difference Between Property Listings That Are Selling and Those That Are Not? 

“There are two types of listings on the market at the moment. There are old listings and new listings. The new listings sell. New listings are educated people who have accepted that it is what it is. Old people, old listings, are anchored on their old prices… and they can’t psychologically come to grips with it.” – Tom Panos

How Does the Current Market Downturn Compare to Past Financial Crises? 

“Not as bad as 91, 92, and 93. That was worse. That was when interest rates were 17, 17 and a half per cent. That was worse. I would say it’s a touch better than the GFC. There are buyers around. There are still deals being done.” – Tom Panos

What Market Drivers Are Supporting Long-Term Property Demand Despite Economic Headwinds?

“The fundamentals are very clear. We’re fighting to work out a number of migrations that we can handle. So just picture the demand bit is there, and it’s not going away. Then you look at the supply bit. We have an issue, and that is the supply. Not only are we way behind, but every day there’s another story that it’s going to get worse.” – Tom Panos

Future Predictions & Market Outlooks

• Potential for Economic Recession: If interest rates rise in November with the recent RBA decision, Australia has a risk of slipping into a recession.
• Potential for a New Global Financial Crisis: A further series of rate hikes could push the market into conditions or pricing pressure comparable to or worse than the 2007-2008 Global Financial Crisis. 
• Melbourne Capital Growth Catch-Up: Melbourne’s property market is undervalued compared to Sydney, Brisbane, Perth and Adelaide, making it the next major capital to possibly experience a catch-up price run. 
• Long-Term Demand & Supply Imbalance: Net migration is predicted to remain strong, causing house demand to stay high, especially as construction delays worsen, causing a housing supply shortage. 
• There is a Temporary Opportunity Window: There is a current temporary combination of reduced buyer competition, rising rent and lower property values, causing a temporary window of buying opportunity for long-term investors. 

Make the Most of the Market Opportunity with Follio

If you are looking to make the most of the current changing market as a first-time investor or an investor looking to grow your investment portfolio, reach out to the experts at Follio today. 

For more direct market commentary on current buyer hesitation, the latest interest rate movements and current market cycles, watch our latest podcast with Tom Panos.