Last year, OTR reported a shortage of used cars on the market within young people’s budgets. Now, used car prices are falling for the first time since the COVID-19 pandemic began. Is now a good time for young people to buy? OTR journalist Alana Pahor investigates. (Image: Alana Pahor)
By Alana Pahor | @Alana_Pahor
Used car prices are dropping for the first time since the COVID pandemic began, giving young people a better chance to buy.
Carsales Content Strategist Anthony Madaffari, who flagged last year’s car shortage, confirmed the price drop late last month.
“For the first time since February 2020 … Carsales has seen a year-on-year decline in median used car prices, with the average price for used car dealer listings falling by 3.4 per cent to May 31 this year,” he said.
Mr Madaffari said the price drop has been caused by increased supply of, and decreased demand for, used cars since the COVID pandemic ended.
“Many people who placed orders of their [new] cars in the last year or so have finally received them,” Mr Madaffari said.
“Many of the cars had been waiting on ships in ports across the country as the quarantine and border force couldn’t keep up with the amount of imports,” he said.
“Those people who received their [new] car then went on to sell or trade in their old car, adding more used stock to the market.
“While general sales continue, the demand has decreased a lot compared to COVID now that people can spend their money on holidays or other big investments like property, so there’s less competition for buyers,” he said.
At the time of reply, Mr Madaffari said there were 43,198 used cars under $20,000 listed on Carsales; this is good news for young people, who typically have lower budgets.
Of the 21 young people surveyed for this story, 86 per cent said they would have a budget of $20,000 or less if buying a car.
However, many of the young people surveyed are not looking to take advantage of the price drop, having already bought cars during the shortage out of necessity.
“Whilst car prices are dropping, I don’t have the same urgency to purchase as I did when I purchased my car,” one respondent said.
“It depends on what the priorities are,” another respondent said. “In my case, I was actively looking for a used car to buy as I require it to commute to work and other places where it would be inconvenient to seek other modes of transport.”
Others are holding off on buying or upgrading because cars and associated costs remain unaffordable, with 62 per cent of those surveyed reporting difficulty affording petrol.
“It is still not feasible for me to own [a car] with my current income,” one respondent said.
Those who currently own cars are also struggling to afford the associated costs.
Survey respondent Mia Stevens-Toomey, who owns a Mazda 323 Astina, said she avoids driving long distances to reduce petrol usage and waits longer to fill up the tank.
“Last year, even if [petrol] was a bit pricier, I’d still fill up,” she said. “Now I find myself waiting until it’s cheaper.”
It’s not all bad though; for young people looking to buy, Mr Madaffari said increases to inflation and the cost of living may make it easier to find an affordable car.
“As people tighten their belts, you’ll see less competition, so you may be able to get a better deal on a used car,” he said.
“Similarly, business[es] will be looking for new customers and may be discounting or offering deals to get people to make a purchase.
“During COVID, product was flying off the shelves and there weren’t as many sales or discounts being offered on cars; [now] you may start seeing more [car sales and discounts] as interest rates rise and consumer spending drops.”
Mr Madaffari said the most recommended used cars for young people are those in the small car category, including the Hyundai i30, Mazda2 and Honda Jazz.
However, he said those looking to buy should “read some owner reviews and see what others have to say about the car, especially if it’s older than five years … as they may list some issues or things to be wary of”.
“Shop around; the first car you see online or in person may not be the best,” Mr Madaffari said.
“We always recommend getting an independent car inspection and history report to give you peace of mind that the car will last the distance and that it doesn’t end up costing you more in the long run.”
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