A buyer's market nobody is buying in: spring 2026 for first home buyers

Cotality's final count for the week to 20 September: 1,841 auctions across the capital cities, and 49.1 per cent of them sold. The same week last year ran 2,638 auctions at a 71.6 per cent clearance rate. Brisbane, the market first home buyers were being priced out of a year ago, cleared 31.4 per cent. Fifteen of the past 17 weeks have come in under 50 per cent, and the preliminary result for the weekend just gone, 26 and 27 September, was 50.3 per cent, the lowest preliminary figure in 10 weeks on a Grand Final weekend that thinned the auction list.

The listings data tells you why. Total advertised stock in the capitals is 24 per cent higher than a year ago, yet new listings are 6 per cent lower. Vendors are not flooding the market. Homes that were listed are simply not selling, and they are piling up. Capital city sales volumes are down 15.5 per cent on a year ago. Cotality's August index, released 1 September, showed national values down 0.9 per cent for the month, the fifth fall in a row, leaving the index 3.6 per cent below its March peak. Sydney is 7.1 per cent below its February peak. Ninety-three per cent of capital city suburbs lost value over winter. Perth, the last of the boom cities, fell 0.8 per cent in August, and Darwin was the only capital to rise.

Who left the room

The buyer who used to outbid you has gone quiet. ABS figures for the June quarter show the number of new investor loans fell 8.6 per cent, the biggest drop since September 2022, with New South Wales down 15.5 per cent and Victoria down 14.2 per cent. CBA told the market in August that investor applications were down 28 per cent since the May Budget, which announced the negative gearing and capital gains changes that passed in June and start on 1 July 2027. Investors are not waiting for those rules to bite before stepping back.

First home buyers have not rushed in to fill the gap. First home buyer loan numbers fell 2.9 per cent in the June quarter and were flat on a year earlier. That is the whole story of this spring in two numbers: fewer investors bidding, and first home buyers who are cautious rather than absent. If you are one of them, the room has more space in it than at any point since 2023.

What that hands you: time and negotiating power

In a market clearing at 70 per cent, the agent's job is to create urgency and yours is to keep up. At 49 per cent it runs the other way. In the week to 20 September, 35.4 per cent of capital city auctions were passed in and another 15.5 per cent were withdrawn, which means about half of all scheduled auctions ended with a vendor who still needs a buyer. Those vendors take conditional offers. Finance clauses, building and pest inspections and longer settlements, all things that got a first home buyer laughed out of the room in 2021, are back on the table. So is an opening offer below the asking price on a property that has been listed for a month.

Time is the other gift. Accumulating stock means you are not choosing between this house and nothing. You can walk away from a property that values short or inspects badly, because there are 24 per cent more like it than there were a year ago.

The catch: you are buying into a falling market with a thin deposit

Bargaining power at the negotiating table does not change the direction of the index. Take an illustrative first home buyer paying $800,000 with a 5 per cent deposit of $40,000. At August's national pace of 0.9 per cent a month, that property would lose about $7,200 in a month and about $42,000 over six months, more than the whole deposit. That is arithmetic, not a forecast; nobody knows how long the falls run. But it shows why a buyer with 5 per cent in has to plan to hold for years, not months. Negative equity only costs you money if you have to sell or refinance while you are in it, so the buyers who get hurt are the ones whose jobs, relationships or budgets force a sale in the next two or three years.

The second risk arrives before settlement. Lenders lend against the lower of the contract price and their valuation, and in a falling market valuers and automated models lean conservative. Same illustrative buyer: contract at $800,000, valuation at $780,000. At 95 per cent of the valuation the lender advances $741,000, so the buyer needs $59,000 instead of $40,000 to complete, plus costs. That $19,000 gap is how deals fall over in this market. We covered valuation shortfalls in detail in June, and every number in that piece has moved against buyers since.

The third risk is your own budget. Canstar estimates borrowing capacity has fallen about 9 per cent since January, more than $47,000 for a single earner on an average full-time wage and close to $95,000 for a dual-income couple. The Reserve Bank decides at 2:30pm tomorrow, Tuesday 29 September, on a hike that markets price at about 90 per cent. If it comes, our rough estimate is that a 25 basis point rise trims another 2 per cent or so from a typical approval, about $16,000 on a $760,000 pre-approval once lenders pass it through. That is why the date on your pre-approval matters as much as the number on it.

The first home buyer playbook for this spring

1. Refresh your pre-approval at the current assessment rate. A pre-approval issued in July or August was assessed before September's fixed rate rises and before tomorrow's decision. Formal approval is assessed on the rates in force when you apply, not when you were pre-approved, so re-run it now and again after any hike is passed on. Then bid to about 95 per cent of the new number, not 100.
2. Favour private treaty and properties that have sat. A listing that has been on the market for 30 days or more, or an auction that passed in, is a vendor already recalibrating. Open below asking, keep finance and building and pest conditions in the contract, and price your offer off comparable sales from the last 90 days, not last spring. Most states give a short cooling-off period on a private treaty purchase; none give one at auction.
3. Make pre-auction offers in writing. With clearance rates near 50 per cent, many vendors will consider a conditional offer before auction day rather than risk passing in. If you do go to auction, remember the contract is unconditional when the hammer falls, so do not bid unless formal finance and a valuation are already in hand.
4. Get a valuation before you exchange, not after. Ask your broker or lender to order the valuation on the specific property before you commit. If it lands under the price you are negotiating, that report is your best argument for a lower price, and walking away costs you nothing but an inspection fee.
5. Keep buffers. Aim to settle with cash left over, ideally three months of repayments, and test that you could carry the loan at repayments two hikes higher than today. The market is not rewarding anyone for stretching right now.
6. Check every scheme before you commit. The 5% Deposit Scheme (formerly the First Home Guarantee) is unchanged: a 5 per cent deposit with no lenders mortgage insurance, subject to property price caps. Help to Buy has 10,000 new places for 2026-27, with income caps lifted on 1 July to $103,000 for singles and $165,000 for couples and single parents; Housing Australia reported more than 7,200 applications by then. Add your state's first home stamp duty concessions and any first home grant, which vary sharply by state and price.
7. Watch this week's data and do not rush. The RBA decides Tuesday at 2:30pm, August CPI lands Wednesday at 11:30am, and Cotality's September index is due on Thursday 1 October. If that index shows a sixth straight fall, time stays on your side. Use it to prepare properly, not to wait for a bottom nobody will announce.

If you read our August piece on the pre-approval window, this is the follow-through. Buyers who got assessed early now hold the strongest hand in the market, provided they re-run the numbers at today's rates. And as we said after the June quarter index, the people who bought at the last bottom in 2023 did not know it was the bottom. They bought properties that worked, at prices that worked, with a deposit and buffer that let them sit through the dip.

Disclosure: Your Finance Guide works in conjunction with ALG Australian Lending Group (ACL 505575). Licensed brokers who meet our criteria pay Your Finance Guide a partnership fee to receive enquiries from this site. The fee is paid by the broker, not by you, and is not added to your loan. Brokers are usually also paid a commission by the lender when a loan settles. Several things in this article pay a broker nothing: negotiating a lower price, walking away from a property that values short, and deciding to wait. They are still often the right call. Market figures are Cotality's published data and ABS lending data as at 28 September 2026; the RBA decision, August CPI and Cotality's September index had not been released at the time of writing. Price, valuation and borrowing power examples are illustrative calculations on the stated assumptions, not quotes. This is general information, not personal advice.