Since late May, fewer than half of homes listed for auction each week have successfully sold, according to exclusive data from Cotality. About 40% of listed homes are being sold before auction, while close to 20% of scheduled auctions are withdrawn weekly. The total number of home sales in capital cities in the three months to June was 16.2% down on the same period last year, said Tim Lawless, Cotality's research director. This has led to more homes sitting on the market for longer, with advertised supply 11% higher over the year to June.
First Home Buyers Getting Cold Feet
First home buyers are stepping back in the face of rising interest rates, ending a boom in demand backed by the government's 5% deposit scheme. They had accounted for more than 10,000 new loans a month from October until March, according to the Australian Bureau of Statistics. Credit agency Equifax reported home loan applications in May were 10.9% lower than May 2025, while first-timer applications were down 13.4%. Loan Market saw first home loan applications fall 20% in June compared to the same month in 2025.
Lauren Jones, a Brisbane buyers' agent, said she had seen only some first home buyers out and about, despite the quieter market working in their favour. "This is what first-time buyers have been waiting for … and they're just not taking the opportunity," Jones said. She added that buyers had been spooked by falling prices: "They freak out when the market's freaking out. First time buyers are out there putting in aggressive offers when the market's hot, but the moment the market cools down, they back off."
Expensive Property Demand Collapses
Higher-end home prices are slumping in Sydney, Melbourne and Canberra. Sydney's top quartile – the top 25% of the market – has seen a median price fall of about $90,000 in the last three months. The top quartiles are made up of homes worth about $1.8m and over in Sydney, $1.1m in Melbourne, $1.4m in Brisbane, $1.2m in Adelaide and $1.3m in Perth. In Hobart, where most home prices are still rising, the top quartile has seen prices go backwards in the three months to June. Jones said Brisbane buyers had grown pickier about top-priced properties, looking for fully renovated homes and ignoring or getting big discounts on houses that need work.
Investors Cutting Back
In mid May, the federal budget cut off access to negative gearing for investors buying existing homes. Banks responded by slashing investors' borrowing capacity by about 20%, National Australia Bank reported. Investor lending was rising at 10.3% annually in May, its fastest rate in a decade, Reserve Bank data shows. Investor loans fell by a fifth from the budget to mid-June while owner-occupier demand held steady, Westpac said. Before the budget, investors had grown to account for about 40% of new home loans at major banks. Westpac's chief executive for consumer, Carolyn McCann, said in June investors had fallen towards the historical average of about 33% of the bank's lending. "We're expecting people are sitting on their hands a bit while they understand the rules," McCann said.
Investors Buying New Homes
Investors remain interested in buying new homes thanks to the budget giving those tax advantages over existing property. Labor's reforms allow investors buying or building new dwellings to continue to negatively gear them and, when they sell, choose between the new or old capital gains tax discounts. Loan Market data indicates new homes are surviving the slump in investor spending, with the brokerage receiving 31% more applications from such investors this June from last June. New builds rose from 4.5% of Loan Market's 2025 total to 7% of its 2026 total. Nick Marino, head of sales at Swooper, a land developer in south-west Sydney, said the downturn was hitting the new-build market, with inquiries down and some developers offering $20,000 discounts. But investors had held steady, accounting for 20% of Swoopland's business. "Our transactions are very, very healthy. We are starting to see more investors coming to the market, but it's a tricky market," Marino said.
