The property market has taken a U-turn thanks to three interest rate rises this year, global economic unrest, an ongoing cost of living crisis and a Federal budget that declared a dramatic tax overhaul for future investors.
FOMO has been replaced by a fear of overpaying and buyer confidence has dropped.
PropTrack’s latest Home Price Index revealed three consecutive months of national dwelling value declines; with prices easing 0.3 per cent in June to sit 0.9 per cent below their March peak.
Some experts, like property guru John McGrath, are predicting a moderate price correction over the next 12 months.
Other insiders, such as leading economist Christopher Joye, claim the “mother of all house price corrections” is upon us.
While the extent of value decline remains to be seen, one thing is sure – we are in a buyer’s market.
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The property market has taken a U-turn thanks to three interest rate rises this year. Picture: NCA NewsWire / Aaron Francis
Property expert John McGrath.
Buyers back in the driver’s seat
Softer market conditions are reducing the urgency felt by buyers in the post-pandemic landscape.
Capital city clearance rates have now spent a month below 50 per cent and listings are lingering.
The good news is, purchasers have time to do their due diligence, negotiate on price, and organise finance.
Cate Bakos, buyer’s agent, said while conditions are favourable, buyers shouldn’t mistake a slower market for a clearance sale.
“Really high quality assets you’ll find still have competition. Maybe not as many buyers on them, and they’re maybe not pushing as hard, but there’s still competition.”
She said in a downturn, the biggest risk buyers make is fixating on a home’s price rather than its quality attributes.
“People are buying bad bargains for really low prices. It’s like buying a bad bag of apples. If the apples are rotten, they’re no good. It doesn’t matter how cheap they are,” she said.
Bakos added that buyers should take their time and be more selective.
“You’ve got to be really fussy, particularly in a down market, because everything is easier to buy.”
Buyer’s agent Cate Bakos.
Time in the market, not timing the market
Buyer’s agent from Good Deeds and co-founder of the First Home Buyer Academy, Veronica Morgan, said uncertainty is causing many purchasers to delay decisions, even when they’re financially ready.
“Consumers are thinking ‘Whoa, hang on a minute. If prices are going to fall, I don’t want to buy now. I’m going to wait until they crash.’ The problem is, nobody knows when it’s the bottom until it’s no longer the bottom.”
Rather than trying to find the trough, Morgan said buyers should focus on what they can control.
“Don’t think you can control this market. That’s completely out of your control. What you can control is your circumstances, whether or not you’re ready to buy, and if this is a good time for your own personal needs.”
Bakos added that buyers shouldn’t second-guess a home with little to no competition or wait for others to validate a purchasing decision.
“When you’ve got an opportunity to buy something at a good price with zero competition, and if you’ve done all your research and due diligence, then you’ll know if it’s a great property. Don’t wait for a flood of other buyers to confirm that for you, because as soon as you’ve got competition, the price is driven up.”
Morgan agreed that attempts to outsmart the real estate market rarely pay off.
“By trying to hang back and be clever, you can actually shoot yourself in the foot and miss out on opportunities that could be perfect for you.”
Buyer’s agent from Good Deeds and co-founder of the First Home Buyer Academy, Veronica Morgan.
Opportunity typically comes with a window
Housing downturns have historically occupied a small part of Australia’s long-term property cycle, but are part and parcel of the supply versus demand equation.
“The market spends roughly a quarter of the time in negative territory, versus three quarters of the time in positive territory. That’s what markets do,” Morgan explained.
PropTrack data shows the average Australian homeowner now holds a property for 10.5 years, up from 9.9 years a decade ago, so anyone buying a home today will likely see out this current downturn to realise capital growth.
Ultimately, playing the waiting game could be the wrong tactical position, said Mortgage Choice broker Samuel Uno.
“With every rate rise, on average, it drops people’s borrowing capacity by about $30,000,” he said.
“My advice is don’t wait. Keep your eyes open and look for opportunity. If you’re looking at listings on realestate.com.au check out the time on market of a property you’re interested in. When agents are coming to the end of their of their six-week exclusivity period then they may be more keen to try to and cut a deal,” he said.
“Or consider a property, especially if you’re buying as an investment, where there’s future opportunity like a big corner block where you could put in a granny flat to increase rental yield. Just try to find something with a point of difference so you can maximise your return on investment when the time comes to sell.”
Mortgage Choice broker Samuel Uno (centre).
What buyers should know
Softer prices – National home values fell 0.3% in June, marking the third consecutive monthly decline according to PropTrack.
Not enough homes – ABS data shows 48,012 dwellings commenced in the March 2026 quarter; a 11.2% quarterly decline. With annual housing starts at about 197,000, supply sits well below the Federal Government’s 1.2 million target of new homes by 2029.
Values still elevated – Despite the recent correction, PropTrack says home values remain 5.8% higher than a year ago
Longer time on market – Cotality data shows homes in capital cities take an average of 34 days to sell, up from 28 days a year ago. Time on market in the regions sits a 43 days, compared with 37 days.
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