According to Cotality since the federal budget in May Melbourne and Sydney home values have been declining at annualised rates of about 10 per cent and 12 per cent respectively.
Meanwhile new listing volumes are on the decline, and capital city home sales are around 16.2 per cent lower than at the same time last year [1].
The result is an unusual market: buyers have more negotiating power, but there are also fewer properties available to purchase (and very few high quality properties). So there’s a bit of a standstill.
Counterintuitively, it’s a challenging market for buyers. It’s tempting to wait for an amazing property to come up (and then to buy it, effortlessly!), but for casual observers waiting for their perfect listing to appear on REA or Domain, nothing’s happening…
I had an interesting personal experience a few months ago where there was a property of interest which came to market and I engaged a buyers advocate to pursue it. We weren’t successful in the end, but it was a still a great learning experience…
The advocate taught me a lot about the local market (which I thought I knew well, then realised I didn’t), and she was able to show me several other off-market opportunities I had no idea even existed.
So I’m starting to suggest a more active buying strategy to clients now…
The idea of building relationships with local buyers’ agents and local selling agents who have strong networks.
I’ve come to realise there are plenty of homeowners who would happily sell their properties in the current market if they received the right price.
Their properties aren’t currently listed on REA or Domain, nor will they officially come to market anytime soon, but they’re certainly available to purchase under the right circumstances, and via the right contacts.
The advantage of pursuing off-market opportunities isn’t necessarily buying cheaply. In many cases, vendors will only transact with a strong price.
The real benefit is gaining access to desirable properties that meet criteria without competing against multiple buyers at an open homes or at auctions.
Another observation is with those looking to buy, and also to sell. The upgraders.
It’s no secret that a weak housing market is favourable in theory to upgraders (you get a larger discount in dollar-terms on the purchase than the smaller discount you accept on your sale).
However I’m noticing potentially dangerous assumptions in many of the analyses being run here.
Many would-be upgraders are modelling their new purchase with an assumed 10-15 per cent discount on values from six months ago, expecting a bargain, while only reducing their own expected sale prices by smaller amounts.
The problem is that markets rarely work this way. If values soften further, the discount upgraders achieve on their purchase may very well be offset by the reduction in price for their existing home.
For anyone considering buying first and then selling second, overly optimistic assumptions (or simply just becoming a forced seller in a weak market) can create real stress without sufficient buffers.
So my general advice right now is to get active, but also to be conservative. There are opportunities available in the current market but they aren’t always obvious and they’re rarely one-sided.
Focus less on bargains and more on finding the right property, ensuring your assumptions stack up in the real world, and with tolerance for some error.
The buyers (and sellers for that matter) who succeed over the next 12 months are likely to be those who make more of an effort.
Making more of an effort to find opportunities, and making conscious efforts to reduce risk.
Thanks as always for reading. Please reach out if you’d like more info.
[1] Cotality – Housing market downturn deepens as demand headwinds build, published 1 July 2026
—
This article provides general information only and has been prepared without taking into account your objectives, financial situation or needs. We recommend that you consider whether it is appropriate for your circumstances and your full financial situation will need to be reviewed prior to acceptance of any offer or product. Nothing on the Long Property website constitutes legal, tax or financial advice and you should always seek professional advice in relation to your individual circumstances.
Australian Credit Licence 53038
