The Australian property market has experienced a significant shift in 2026.
Property prices have fallen in many markets , driven by multiple cash rate hikes, Federal Budget tax reforms, geopolitical tensions, and affordability constraints.
While Sydney and Melbourne have led the downturn, smaller capitals like Brisbane, Adelaide and Canberra are also seeing values decline.
So, is now still a smart time to buy?
For first-home buyers, knowing when to jump in can be confusing, but many experts say it’s less about timing the market and more about being financially ready.
REA Group Senior Economist Anne Flaherty said current market conditions had dampened demand, but the fundamentals were in place to support a gradual recovery.
“Higher interest rates, affordability constraints and recent housing tax changes have weakened buyer demand and reduced overall market activity,” she said.
“Despite the current correction, tight rental markets, strong population growth and an ongoing housing undersupply are likely to support recovery over the long term.”
The May Federal Budget announced the biggest property tax overhaul in decades, restricting negative gearing for residential property investments from July 1, 2027, and replacing the 50% CGT discount with cost base indexation and a 30% minimum tax rate on capital gains. However, there’s an exception to these changes, and that’s for investors buying and building a new home, in which case, the old rules still apply.
The Government said the changes were intended to level the playing field for first-home buyers – reducing investor demand for existing homes and encouraging new housing construction to improve access for home buyers over the long term.
“The latest Federal Budget was broadly supportive of first-home buyers, with a stronger focus on boosting housing supply and expanding pathways into home ownership,” said Ms Flaherty. “For investors, there are now greater tax incentives for buying new, with negative gearing and the capital gains discount now no longer available for established properties.”
“Despite this, affordability remains a major challenge in many markets.”
Stockland Masterplanned Communities Executive General Manager Mike Davis said over the past 12 months, buyers had become more deliberate and informed in their decision-making, driven by affordability pressures and broader economic uncertainty.
“Rather than simply looking for the lowest price point, buyers are spending more time researching, comparing options, and seeking confidence that they are making the right long-term choice,” he said.
“We’re also seeing the journey from initial enquiry to purchase taking longer than it has previously, as customers continue to navigate cost-of-living pressures and borrowing constraints.”
Mr Davis said many buyers were increasingly considering masterplanned communities in high-growth corridors, where new housing supply, established amenities and transport connections can offer a more accessible path to home ownership.
“For many first-home buyers, value remains a key consideration, but they’re also placing a greater importance on livability, convenience, and community,” he said.
“Well-planned communities in growth areas can provide access to new homes alongside parks, schools, retail and infrastructure, helping buyers balance affordability with the lifestyle they’re looking for.”
Luke Camilleri, Director and Senior Broker of Mortgage Choice Parramatta, said new homes could be attractive to first-home buyers looking to make the most of grants and incentives.
In 2026, many support schemes still remain or have even been boosted to help lower the amount needed for a deposit and assist first-home buyers entering the property market.
The First Home Owner Grant (FHOG), for example, is a financial payment to help first-home buyers purchase or build a new residential property.
The grant amount and property price thresholds differ depending on location.
In Queensland, the grant was doubled from $15,000 to $30,000 in 2023 – a temporary offer set to finish this year, however it was announced that it would be extended for another four years.
Other government incentives to consider include stamp duty relief, and the Australian Government 5% deposit scheme , applicable to both new and established purchases.
Mr Camilleri said rising interest rates had reduced borrowing capacity, making it harder for first-home buyers to enter more expensive areas, even on relatively strong incomes.
When assessing a borrower’s ability to repay a home loan, banks apply a 3% serviceability buffer above their home loan rate.
Lenders typically offer borrowers five- to seven-times their income, depending on the lender and the borrower’s existing debts and liabilities, Mr Camilleri noted.
As rates began to fall in 2025, borrowing capacity improved, he said.
“Whereas it went the other way this year.”
“It doesn’t mean they don’t have options,” Mr Camilleri said, noting that first-home buyers are increasingly broadening their search to growth corridors where new housing is delivering more affordable pathways into home ownership.
The continued development of these growth areas is increasing housing choice for buyers while supporting Australia’s goal of delivering 1.2 million new homes by June 2029 under the National Housing Accord.
For those looking to buy in 2026, the first step is to assess borrowing power, consider new versus established properties, and compare currently available incentives and schemes.
Stockland offers a wide range of homes at different price points, and Mr Davis said the strongest demand was for homes that balanced affordability, functionality and lifestyle.
“This is particularly evident among first-home buyers, who continue to represent a large share of demand and are gravitating towards products that help them enter the market sooner while still meeting their longer-term needs,” he said.
“For many buyers, that includes house and land packages and townhomes, which provide an accessible pathway into home ownership without compromising on quality, location or amenity.”
Mr Davis said beyond affordability, buyers wanted homes that delivered long-term value through thoughtful design, energy efficiency and access to established community infrastructure.
“Rather than being driven by a specific price point, demand is increasingly centred on value,” he said.
“Buyers want confidence that what they’re purchasing will support their lifestyle today and remain a good investment for the future.
“Communities that combine affordability with quality amenity, connectivity and a sense of place continue to resonate strongly with customers.”
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