Upsizers are the big winners in a declining market
Recent headlines have screamed that prices may fall anywhere from 1% to 10%. Falling property values usually get treated like bad news. If you're upsizing, it might be the best news you've had all year. We break down the numbers.
THE LADDER LOWDOWN:
Property declines are an opportunity: Recent headlines have talked up falls anywhere from 1% to 10%. For upsizers, that's not a warning sign, it's an opportunity.
On a $2m → $3m upsize: a falling market is worth $233K to the buyer ($200K on the gap, $33K on stamp duty) compared with the same move in a rising market.
Prestige upsizers gain even more: a $7m → $10m upgrade is worth roughly $740K more in a falling market than a rising one.
An upsize from $2m to $3m
Upsizing means many different things to different people:
Moving from an apartment to a house
More space for everyone
Kids not sharing a room anymore
A study so you’re not WFH in your kids bedroom
A pool
But the cost can be great and put people off. But in a declining property market you can be the big winners, as it costs less to upgrade
📈 Rising market (+10%):
Your home → $2.2m
Your target → $3.3m
Gap → $1.1m
📉 Falling market (–10%):
Your home → $1.8m
Your target → $2.7m
Gap → $900k
A declining market mean the cost of upgrading is significantly less.
$200K less in upgrade costs (the gap shrinks instead of growing)
$33K less in stamp duty (duty on $2.7m vs. $3.3m)
$233K less, all up
Prestige Upsizers are even bigger winners.
The prestige market is seeing bigger falls, in some of the most expensive suburbs. In just 3 months:
Coogee has dropped 9.5%
Mosman down 8.6%
Hunters Hill down 5%
If you were a prestige upsizer moving from a $7m property into a $10m one:
📈 Rising market (+10%):
gap widens from $3m to $3.3m
📉 Falling market (–10%):
gap narrows from $3m to $2.7m
A declining market reduces the cost to upgrade:
$600K less in upgrade costs
$140K less in stamp duty (duty on $9m vs. $11m)
$740K less, all up
Planning for upsizing
There’s also a few other considerations before you act on it.
Get properly informed, not just optimistic.
Headlines quoting "1% to 10%" falls are national or capital city averages. Its important to get a proper read on comparable sales in your suburb or street, before you list or make an offer. In addition to real estate agent advice, its important to view local properties, and understand why each sold for the price it did.
We can also provide you with a free property report on your current property - how the banks value it. And if you’re looking to upgrade in certain areas, we can provide you with a suburb report to get more insight on what’s happening. Fill out your details here Ladder Property Report.
Know your borrowing capacity first.
Rate rises over the past six months have pushed the cash rate to a 15 month high, and lenders have tightened how they assess larger loans as a result. We can review your current situation and tell you your true borrowing capacity, before you fall in love with a $3m home, or a $10m one at the top of your limit.
Its also important to model different scenarios - e.g. what happens if I upgrade to a slightly lower price?
Sell first or buy first?
Selling first gives you certainty on your budget, but you're racing the clock to find your next home and may need somewhere to land in between. Buying first lets you move at your own pace, but you're carrying two properties, and potentially two loans until settlement, which is where bridging finance comes in. Neither is automatically right; it comes down to your equity position, risk appetite, and how tight your target market is.
We can help you understand the different situations, and provide you with bridging finance.
None of this changes the core numbers, a falling market still favours the upsizer. But getting these three right is what determines whether you actually capture that advantage or get caught out chasing it.
Move forward with confidence
Whether youre planning a small upgrade, or a prestige one, its important to go in well informed. We can help give you the right information and borrowing capacity to move forward with confidence.
🏠 Property Reporthttps://www.ladderfs.com.au/propertyreport
📅 Book a discovery call: www.ladderfs.com.au/book-now
📞 0414 877 724