The Perth house is $105,000 cheaper than in January. Why is her repayment higher?

She is 46. She owns her home in Melbourne's east and one rental she bought in 2024, and for most of this year she has been on the receiving end of a pitch.

Perth is on sale, the pitch goes. The median has dropped under a million. Get in before it turns.

She is a composite, drawn from the questions we receive, but the message landing in her inbox is real and it is landing in a lot of inboxes right now.

So she did the sensible thing. She asked her broker to re-run the numbers on a Perth house priced about $105,000 below where the same kind of property would have sat in January.

The repayment came back higher than the quote she had been given at the start of the year.

The question she sent us

"Perth prices have fallen by more than a hundred thousand dollars since January. Everyone is telling me this is the window. But my broker says my monthly repayment on a cheaper house is now higher than it was on a dearer one. How does that make any sense, and is this still a good time to buy?"

It makes perfect sense. It is also the part of the Perth story that almost nobody puts in a headline.

The answer: two numbers moved, and only one of them is yours

Start with what actually happened, using Cotality's latest quarterly home value index as reported in the Sydney Morning Herald on 1 October.

Perth's median dwelling value was about $1.08 million in January. It stayed above a million until July. It is now $975,000. Over the past three months, values fell 4.7 per cent. Cotality's research director Tim Lawless says the market peaked in March and that this is the most rapid of Perth's eight downturns in the past 40 years.

That is the first number. The one in the pitch.

Now the second. On Tuesday the Reserve Bank lifted the cash rate to 4.6 per cent, a 15-year high.

A fall in the median is a change in what other people paid for other houses. A rise in the cash rate is a change in what you pay, on your loan, on the 28th of every month, for the life of the debt.

The first number is a statistic about the city. The second number is a line on her bank statement.

That is why a cheaper house can carry a dearer mortgage. The purchase price went down by a step. The cost of every dollar she borrows went up at the same time, and she is borrowing most of the price. Perth property specialist Trent Fleskens put it bluntly in the same article: the house price could have gone down, but if the rate went up and the debt still costs the same each month, what was the benefit?

For a buyer with a 20 per cent deposit and the rest on a loan, a 4.7 per cent price fall and a rate rise can wash each other out, or worse. She found that out from her broker rather than from the headline.

The median was never her number

There is a second problem with "Perth is on sale", and it is bigger than the rate.

The median is a single figure across roughly 400 suburbs. Fleskens made the point in the article that when Perth's median rises 10 per cent in a year, some suburbs fall that year. When the median goes sideways, half the suburbs are up and half are down.

The same article reports that the Perth areas which did grow this year were all in the outer ring. Serpentine-Jarrahdale, Mandurah and Rockingham led the city. Lawless says mortgage belts across the whole country are seeing the same thing, because at today's rates a household on a median income struggles to service a loan at the median price, so demand is being pushed down toward the cheaper end of the market.

So while the headline says Perth fell, some Perth streets rose. A buyer who pays the "discounted" price in a suburb still falling has not bought a bargain. A buyer who pays in a suburb still rising has not bought the discount at all.

Two streets in the same suburb can be having completely different outcomes. The median tells you about neither.

What this means for you

If you own a home with equity and someone is pitching you a falling market as a buying window, the price fall is the weakest reason on the table.

The questions that decide whether this works for you are duller and more important:

• What does this property cost you per month to hold at a 4.6 per cent cash rate, after rent, and for how long can you carry that?
• How is the debt structured? Variable or fixed, which lender, cross-secured against your home or kept separate?
• Is the specific street rising, flat or falling, regardless of what the city median is doing?
• What is the rent doing on that street, and how long are comparable places sitting vacant?

None of those are answered by "the median dropped below a million". Perth is still up 10.1 per cent over 12 months and 74 per cent over five years, according to Cotality. The price fall is real and it is sharp, and it still tells you nothing about whether a particular house on a particular street is a good asset for your particular balance sheet.

The expensive mistake

The expensive version of this story is buying the discount and ignoring the holding cost. She goes unconditional because the price looks good against January, then discovers twelve months of repayments that are higher than her plan assumed, on a street that kept falling after she bought.

The cheap version is to treat the headline as noise and underwrite the asset. Total holding cost. Cashflow. Loan structure. The street, not the city.

The Ripehouse reframe

We do not ask clients to guess the bottom. Nobody can, and the people most confident about it are usually selling something.

What we do is test a decision like hers on structure. The right asset, in the right street, with debt arranged so that a rate rise is survivable, has beaten headline timing over every cycle we have measured. We publish those results in full, including the portfolios that underperformed, because that is the only way anyone should trust a property adviser.

The Perth median will keep doing whatever it does. Her repayment, her street and her loan are the things she can actually control.

If you are weighing an entry into a falling market and want to see how we test the street and the holding cost rather than the headline, join Jacob's free live webinar, If I Were Buying an Investment Property in Australia Today.