After a few years of record-high prices, the housing market is starting to feel more balanced. If you’re thinking about buying, that could mean more choice, more time to think and more room to negotiate.
We recently sat down with Cotality’s Head of Research, Tim Lawless, to unpack what’s happening across Australia’s housing market, what it could mean for borrowers, and why now is a good time to check in with your broker.
Where home values are heading
Across the combined capital cities, home values were flat over the three months to May 2026. Sydney was down 2.1% and Melbourne was down 2.3%, while Brisbane, Perth and Darwin still grew, just not as quickly as last year.
Regional markets are moving differently. With Western Australia, Tasmania and Queensland still showing signs of growth, while regional NSW and Victoria are softening, likely due to historically higher prices. Lower-priced homes are also holding up better as buyers look for value and affordability.
A broker can help you work out your borrowing capacity to help frame your property search early on. Even if prices are cooling, your borrowing power may have changed because of recent cash rate moves and higher living costs. Understanding what you may be able to borrow early can help avoid surprises later.
What’s driving the shift?
It all comes down to a simple rule of economics: when there are fewer buyers and more homes for sale, prices tend to ease.
There are a few reasons why buyers might be stepping back. Population growth has slowed, homes are still expensive, and after a run of interest rate rises, people are cautious about taking on more debt. Add a higher cost of living and wages that aren’t keeping pace (real wages actually fell 1.3%), and it’s no wonder buyers are taking a more cautious approach. We’re seeing it play out at auctions too, where softer results suggest buyers have more breathing room and sellers may need to be ready to negotiate.
“the fact that we’re starting to see more supply coming into the marketplace is a real opportunity for buyers, it’s also adding to the downwards pressure on prices.” Tim Lawless
And there’s certainly more on the market. With demand cooling, homes are taking longer to sell, so listings are piling up. Across the combined capitals, total listings are up 7.4% compared to this time last year. Interestingly, the cities seeing the weakest price growth are the ones with the biggest jump in homes for sale. However, there’s signs of a two-speed property market at play, as cities that have held up best (Perth, Hobart and Adelaide) actually have fewer properties listed than they did five years ago, which in-turn is driving price growth.
The investor picture
Proposed changes in the Federal Budget could shift how investors think about tax, rental returns and where growth might come from next. That, in turn, could change demand in certain markets. So if you’re weighing up an investment, it’s worth getting clear on your likely cash flow, what’s coming in from rent versus what’s going out, to see if the numbers still add up.
“Investors are going to be looking around quite creatively for
what’s the best path for their capital? If it’s not residential property or established residential property, commercial may be a logical option.” Tim Lawless
For now, rental properties are in short supply. Vacancy rates are sitting at a low 1.5%, and rents have climbed 5.9% over the past year. And here’s a twist: if investors start putting their money elsewhere, rental yields could actually rise, simply because there’s less competition from other investors.
Will history repeat itself?
Property markets move in cycles. Prices rise, they slow, and every so often they dip. What we’re seeing now isn’t new, but that doesn’t make it any less unsettling, especially if you’ve bought recently.
One thing worth knowing: when the market softens, the number of homes for sale usually drops more sharply than prices do, because many owners choose to sit tight and wait things out. During the Royal Commission period between 2015 and 2019, sales fell by as much as 26% over nearly four years. So, while the headlines can sound alarming, the smartest thing you can do is keep your eyes on your own numbers.
The bottom line
For buyers, the market may feel a little calmer than it has in a while. More choice, more time, and more room to negotiate are all good things, but only if you’ve got a clear picture of what you can comfortably afford.
The best next step is a simple one: understand your options before making any moves. Whether you’re ready to buy, are thinking about refinancing, or are just starting to have a look around, a broker can make sense of the market and what options might be available to you.
