Why Cheap Property Markets Are Safer in a Market Crash - Expert Busting Series

Fake experts warn investors away from cheap markets. The claim is that when times get tough, cheap markets fall the hardest.

Investors avoid affordable suburbs on this basis. They pay more for markets they believe are safer.

Historical data was examined across 45 years of Australian property history. Five market corrections. One consistent result.

Cheap markets do not fall the most. Expensive ones do.

Finding the Tough Times

The chart below shows the Australian median house price across significant urban areas from 1980 to 2025. Purple bars mark the five periods where the national median stopped growing or went backwards.

Line chart titled Australian Median showing national median house prices from December 1980 to April 2025. The vertical Y axis shows values from $0 to $1,200,000. The teal line tracks the national median across significant urban areas including all state capitals and larger regional centres. Five purple vertical bars mark periods where the national median had zero or negative growth. The bars appear at approximately 1990, 2008-2009, 2011-2012, 2018-2019, and 2022-2023. The majority of the 45-year period shows positive growth outside these five correction periods.

How the Analysis Works

All suburbs were grouped into SA3s (Statistical Area Level 3). Each SA3 is roughly the size of a local government area. There are about 330 SA3s across the country.

SA3s were then split into 10 deciles by typical property value:

Decile 1: cheapest 10% of SA3s
Decile 2 to 9: mid-range
Decile 10: most expensive 10% of SA3s

For each correction, growth was calculated per decile. Cheap deciles on the left. Expensive on the right. A trend line shows the general pattern.

Correction 1: July 1990 to December 1990

The chart below shows growth by value decile during the first correction.

Bar chart titled Market Correction of 1990-07 to 1990-12 showing growth percentage total on the vertical Y axis from minus 3 to 8 and value decile on the horizontal X axis from 1 cheapest on the left to 10 most expensive on the right. The cheapest decile on the far left shows growth of approximately 7 percent. Bars decrease progressively from left to right. The most expensive decile on the far right shows growth of approximately minus 1 percent. A dotted trend line slopes downward from top left to bottom right confirming the general rule that cheaper SA3s outperformed expensive ones during this correction.

Period: July 1990 to December 1990
Duration: 6 months
Cheapest decile: plus 7%
Most expensive decile: minus 1%
Result: Cheap markets grew. Expensive markets went backwards.

The nation was having a tough time. Cheap markets were booming.

Correction 2: November 2008 to April 2009

The chart below shows growth by value decile during the Global Financial Crisis.

Bar chart titled Market Correction of 2008-11 to 2009-04 showing growth percentage total on the vertical Y axis from minus 8 to 2 and value decile on the horizontal X axis from 1 cheapest on the left to 10 most expensive on the right. The cheapest deciles on the far left show positive growth of approximately 1 percent. Bars decrease from left to right with the most expensive decile on the far right falling by approximately minus 7 percent. A dotted trend line slopes steeply downward from top left to bottom right confirming cheaper SA3s significantly outperformed expensive ones during the GFC correction.

Period: November 2008 to April 2009
Duration: 6 months
Cheapest decile: plus 1%
Most expensive decile: minus 7%
Result: Cheap markets held. Expensive markets fell hard.

Correction 3: May 2011 to August 2012

The chart below shows growth by value decile during the third correction.

Bar chart titled Market Correction of 2011-05 to 2012-08 showing growth percentage total on the vertical Y axis from minus 12 to 8 and value decile on the horizontal X axis from 1 cheapest on the left to 10 most expensive on the right. The cheapest decile on the far left shows growth of approximately 6 percent. The second cheapest decile shows approximately 2 percent. Bars from decile 3 onward are all negative. The most expensive decile on the far right fell by approximately minus 9 percent. A dotted trend line slopes downward from top left to bottom right confirming the same pattern.

Period: May 2011 to August 2012
Duration: 15 months
Cheapest decile: plus 6%
Most expensive decile: minus 9%
Result: A gap of 15 percentage points between the cheapest and most expensive deciles.

Correction 4: July 2018 to May 2019

The chart below shows growth by value decile during the fourth correction.

Bar chart titled Market Correction of 2018-07 to 2019-05 showing growth percentage total on the vertical Y axis from minus 8 to 10 and value decile on the horizontal X axis from 1 cheapest on the left to 10 most expensive on the right. The cheapest decile on the far left shows growth close to zero. The second decile shows approximately 8 percent growth. The third decile shows approximately 5 percent. Bars decrease from decile 4 onward with the most expensive deciles showing negative growth of approximately minus 5 percent. A dotted trend line slopes downward from top left to bottom right confirming the same general pattern.

Period: July 2018 to May 2019
Duration: 11 months
Cheapest decile: near zero
Most expensive decile: minus 5%
Result: The cheapest SA3 barely moved. Expensive markets fell. The trend line slopes the same way.

Correction 5: June 2022 to February 2023

The chart below shows growth by value decile during the most recent correction.

Bar chart titled Market Correction of 2022-06 to 2023-02 showing growth percentage total on the vertical Y axis from minus 10 to 6 and value decile on the horizontal X axis from 1 cheapest on the left to 10 most expensive on the right. The cheapest decile on the far left shows positive growth of approximately 3.5 percent. The second decile shows approximately 3 percent. Bars decrease from decile 3 onward with most expensive deciles showing negative growth ranging from minus 2 to minus 8 percent. A dotted trend line slopes downward from top left to bottom right confirming the same pattern across the most recent correction.

Period: June 2022 to February 2023
Duration: 8 months
Cheapest decile: plus 3.5%
Most expensive decile: minus 8%
Result: Same pattern. Cheap positive. Expensive negative.

Five corrections. Five results in the same direction. The trend line in every single chart slopes downward from cheap to expensive.

Why Does This Happen

Two reasons might explain the pattern:

Demand shuffles down. Perhaps when buyers become cautious, they move toward more affordable options. If so, demand would concentrate at the cheaper end of the market.
Wage earners at full tilt. Perhaps lower income earners working 37.5 hours a week have flexibility. They might supplement income with part-time work when times get tough. Perhaps a higher income earner can’t significantly supplement their income giving a few rideshare trips each night. If so, when mortgage stress hits, they have to sell.

Conclusion

Cheaper markets do not fall the most during tough times. Expensive markets do.

Five corrections across 45 years. The same pattern every time.

The advice to avoid cheap markets because they are riskier is not just wrong. It is the opposite of the truth.

Cheap markets are not the risk. They are the refuge.

In tough times, there is no flight-to-quality. Instead, there is a flight-to-affordable.

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