In today’s easing market, it may be tempting to wait for property prices to fall further. But it’s a strategy that could see first home buyers left disappointed. We explain why.
There is no shortage of media headlines touting big falls in home prices.
But the reality may be less sensational.
While some property values at the luxury end of the market could be seeing price falls of up to 10%, it’s a very different picture at the more affordable end of the market.
We look at what’s happening with home prices, and why holding out for prices to fall further could work against first homebuyers.
Good news for buyers: values have softened in most capital cities
The big picture is that home values nationally dropped 3.1% over the three months to September, taking annual price growth to just 2.7%, Cotality reports.
However, conditions vary between capital cities, and across market segments.
And here’s what first home buyers need to know.
Higher-value housing is recording larger price declines than affordable homes.
The affordable end of the market is proving resilient
As Cotality puts it, high-end homes are leading the downturn, while lower-priced houses and units are proving more resilient.
As a guide, in the three months to August, property values across the top 25% of the Sydney market fell by 5.7%. By comparison, values in the most affordable 25% of the market, fell by just 2.1%.
In Melbourne, the most expensive segment of the market saw values fall 5.3%, while the cheapest quarter of the market saw prices drop by just 1.3%.
And it’s a similar pattern across almost every state capital, Cotality research shows.
Hobart and Darwin bucked the trend, with home values in the most affordable segment of their respective markets rising over the last quarter.
These findings matter for first home buyers.
That’s because most first-time buyers start out in the more affordable end of the market – and that’s exactly where home values are experiencing softer price falls, if any at all.
Why are affordable homes seeing lower price falls?
Several factors are helping to limit price falls across affordable neighbourhoods.
These include steady entry-level demand.
In the June quarter of 2026, for example, over 29,000 first homebuyers purchased a place of their own. That’s about the same number for the same quarter in 2025.
Demand for affordable homes is also being supported by a range of first home buyer initiatives such as the 5% Deposit Scheme, the First Home Owner Grant and stamp duty savings initiatives.
It can also come down to numbers. There are simply fewer people who can afford to buy a luxury home.
What does this mean for first home buyers?
“Affordability” is the name of the game for plenty of today’s home buyers.
That’s because three rate hikes this year have reduced the borrowing power of many buyers.
Not surprisingly, that’s seen plenty of Australians hone in on affordable suburbs, which remain sought-after for their lower entry prices.
Across some cheaper suburbs, the number of online buyer searches has more than doubled compared to a year ago.
This doesn’t necessarily mean prices will rise in these neighbourhoods.
However, an increase in the number of buyers competing for a limited number of affordable homes may put upward pressure on prices – or limit the extent of any future price falls.
Talk to us today
As affordability pressures push demand toward cheaper markets, lower-priced suburbs may continue to be hot property among budget-conscious buyers.
This could see values in these areas hold their ground – or even buck the trend by starting to climb higher.
The bottom line is that if you’re a first home buyer, and you’re waiting for home prices to fall further, you could be disappointed.
Talk to us today to know if you’re home-loan ready right now.
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