Our team works remotely and fully online. We are open and will stay open throughout the coming months. Signup Now.

The PropertyNow Blog

6 Impacting Factors That Bring Property Value Down

a woman pointing to a floorplan on her laptop's screen

showing property plan to client

Property prices around the world rise and fall in cycles, impacted by influences such as the economy, interest rates, and employment. Depending on the circumstances, property prices react across the globe or they are affected on a more local level, relating to the country or even suburb.

As homeowners, we’re never happier than when the value of our home is on the rise, but impacts, often outside of our control, cause prices to fall. Here are 6 of the biggest impacts that bring property value down:

The economy

Demand for housing is dependent upon income. When the economy is in poor shape, income declines, the employment rate goes up, homeownership gets put in jeopardy and people have less money to spend on things like housing.

Sellers then lower their prices to compete in a diminishing market and values take a downhill turn.

The good news is, property tends not to see the same declines as shares during an economic downturn, because we use the property to live in and it’s not as speculated upon as shares. Also, it can’t be bought and sold as quickly as shares, so price movements aren’t as volatile.

Higher interest rates

When interest rates increase, home affordability is less in reach for many buyers. Buyers can’t afford to spend as much on the initial purchase price because their monthly mortgage payments are higher and they have to pay more over the life of the loan. Homeowners with variable mortgages are more impacted by high-interest rates than those with fixed loans.

A rise in interest rates also affects sellers because the pool of buyers able to afford your sale price tends to be lower. You may find you have to drop your price to appeal to more buyers.

High-interest rates can also drive a shift towards renting property as it becomes the more affordable option.

Consumer confidence

Consumer confidence affects property prices because when confidence is high people tend to shop more, spend more, and borrow more. If people are worried about the economy and that property prices are going to fall, they can be anxious about taking out a mortgage and delay buying.

The media play a huge role in driving down consumer confidence because negative headlines tend to sell and when the economy takes a turn for the worse, the papers fixate on doom and gloom predictions about the state of the economy.

Supply and Demand

When there’s an oversupply of houses and low demand, property prices fall as sellers must compete against each other for a smaller pool of buyers, often forced to lower their sale price.

The supply of housing depends on existing stock and new house builds. Supply and demand can be relative to specific regions, cities, even suburbs, which is why two nearly identical properties in different locations may sell for vastly different prices.

A new hospital or a new school within a suburb can quickly catapult demand within a suburb due to an increase in jobs or parents wanting to move within the catchment zone of the school.

Mortgage availability

During economic booms, banks are keener to lend mortgages with more relaxed borrowing conditions such as lower deposits. On the reverse side, they often tighten their lending criteria during economic instability and credit crunches when they struggle to raise funds for lending on the money markets. This drives down demand, and subsequently property prices.


Environment plays a huge role in the value of the property. We want to live in locations that have beautiful scenery and deliver a high quality of life. When the environment we live in is negatively impacted by a landfill leaking methane or the scenery is destroyed by the installation of a new power plant, the appeal and demand for that location decline driving down the value of properties in the vicinity.

Disclaimer: This article is general information only and is intended as educational material. PropertyNow nor its associated or related entities, directors, officers, or employees intend this material to be taken as advice either actual or implied. You shouldn’t act on any of the above without seeking qualified advice, which takes your individual circumstances into account. 

A 5-step approach to selling a house without an agent to get the best return

Why spend tens of thousands on agent commissions? Selling a house without an agent is steadily gaining momentum among sellers...

What’s the Most Accurate Property Value Estimator?

When it comes to researching the value of your property, there are countless websites offering free property value estimators, price...

Showcase your home through a 3D virtual house tour

When it’s difficult for buyers and tenants to view your property in person, why not let them view it from...

a man and a woman happily getting the keys from an agent

Cooling-off periods for property: 4 things you should know

Property tends to be one of our greatest investments. As a result, buying property is a huge decision – especially...

a hand holding a pink ceramic pig

3 Things You Should Fix Before Selling Your Home

When it’s time to sell, you want to maximise your property’s sale potential and the one thing that puts buyers...

a man and a woman getting the keys to their new home

Property Settlement: What Happens and What Should You Do?

When selling your home, settlement day is the end of a chapter and the start of a new chapter. You’re...

a cube-shaped modern house in red, black, and white colours

The hidden fees for selling a house

When selling property, many people use their final sales price as their determining success factor, forgetting to detract all the...

a cartoon of a man using a giant umbrella as a shield against viruses

Open House During Pandemic – How to Manage It

Not sure how to manage your private inspection or open house during pandemic? We have all the answers for you. ...

an artist's rendition of a virus

5 ways to adjust your property sales plan for Covid 19

The Coronavirus pandemic has grounded planes, closed down restaurants, and caused panic buying across the globe, but amid all of...