The property market is in a state of flux, and it's not just the first-time buyers who are feeling the pinch. Joshua Goodfellow, an 18-year-old aspiring investor, has found himself in a quandary. With a trio of interest rate hikes, Labor's tax reforms, and global economic and geopolitical uncertainty, he's had to hit the pause button on his house hunt. This is not an isolated case. The market is seizing up, with existing sellers hit by a buyer's strike. The data bears this out: fewer than half the homes listed for auction changed hands in the first weekend after the May 12 federal budget was handed down, with the final clearance rate dropping to 43.1 per cent, according to Cotality data.
Westpac analysts have forecast a 34 per cent decline in new investor activity, a 20 per cent slide in real estate transaction volumes, and stalling home price growth across all capital cities this year. This is already playing out, with capital city sales down from 32,863 in May 2025 to 27,342 in May 2026, a fall of almost 17 per cent. The real estate market has shifted from urgency to caution, with buyers taking longer, fewer active bidders, and open-home attendance softening.
What's driving this shift? Uncertainty, of course. According to Loan Market data, investor mortgage applications fell 23 per cent at the end of May, while first home-buyer applications were down 12 per cent. Rebecca Cuderman, principal of NGU Real Estate's Logan office, sees this in her day-to-day dealings. Buyers are becoming wary, with fewer people attending inspections and more waiting to see if prices fall further. The changes to housing investment tax settings are weighing on investor demand, with industry estimates suggesting a reduction in borrowing capacity of between 10 and 20 per cent.
But is now really a good time to buy? For those who are financially ready, now could be a good opportunity. When sentiment weakens, buyers generally have more negotiating power, with less competition and sellers becoming more realistic. However, the market downturn is likely to last while three things remain unsolved: interest rates, the final shape of the budget tax changes, and global economic uncertainty. The housing market is in a recalibration period, and the impact on rental supply is a concern.
In my opinion, the property market is in a delicate balance. While the current uncertainty may be off-putting for some, it could also present an opportunity for those who are financially ready. However, the market's future trajectory remains uncertain, and it's essential to keep an eye on the three key factors mentioned above. The next few months will be crucial in determining the market's direction, and it's anyone's guess what the future holds.
