First-Home Buyers • Falling Property Prices • Buying Opportunity
Are We Near the Bottom?
Why First-Home Buyers Should Start Looking Now
Australian property prices are falling across more cities, buyer competition has weakened and some sellers are becoming more flexible. For first-home buyers who have spent years watching the market run away from them, the balance may finally be shifting.
Nobody can identify the exact bottom of a property cycle in advance. However, buyers do not need a perfect forecast to recognise a better buying window. They need realistic borrowing figures, a sensible buffer and the confidence to negotiate while other buyers are still hesitating.
The market has changed — and first-home buyers should pay attention
For several years, many first-home buyers faced the same frustrating problem. While they saved their deposit, prices kept rising. Their target moved further away, their required loan grew and competition forced them to make decisions quickly.
That momentum has now weakened. Recent housing data shows falling values across the national market, with Sydney and Melbourne leading the decline and weakness spreading into Brisbane and Adelaide. Listings have increased in parts of the country, auction results have softened and buyers have become more cautious.
This does not mean every suburb or entry-level property has become cheap. It does mean buyers may have more time, more choice and more room to negotiate than they had during a rapidly rising market.
The opportunity: the best buying conditions often appear before confidence returns. Once everyone agrees the market has turned, competition may already be increasing again.
1. Is this actually the bottom of the property market?
Possibly — but nobody can confirm it today.
A market bottom only becomes obvious after prices have stopped falling and begun rising again. By that point, buyers may face stronger clearance rates, more competition and vendors who feel less pressure to negotiate.
That is why waiting for an official declaration of “the bottom” can be counterproductive. Property markets usually turn before the headlines become comfortable. Buyers who are financially ready can instead focus on whether the current conditions are better than the conditions they faced six or twelve months ago.
Right now, several signs point towards a more favourable buying window:
- home values have declined across a broader range of capital cities;
- buyer demand and new mortgage applications have weakened;
- some properties are spending longer on the market;
- vendors are reducing asking prices or changing auction campaigns;
- buyers have become more cautious after interest-rate increases; and
- the spring selling season may bring additional stock to market.
Better question: instead of asking whether today is the exact bottom, ask whether you are now able to buy a suitable property at a fair price with repayments you can comfortably manage.
2. Lower prices can reduce the deposit and loan you need
A lower property price creates an immediate mathematical advantage. The deposit generally falls, the required loan becomes smaller and the buyer may retain more savings after settlement.
| Purchase price | 5% deposit | Approximate 95% loan |
|---|---|---|
| $750,000 | $37,500 | $712,500 |
| $700,000 | $35,000 | $665,000 |
| $650,000 | $32,500 | $617,500 |
| $600,000 | $30,000 | $570,000 |
If a property falls from $700,000 to $650,000, a 5% deposit reduces by $2,500 and the approximate loan reduces by $47,500. That smaller loan may be the difference between stretching to the limit and retaining a useful monthly buffer.
Buyers using a larger deposit receive an even bigger cash benefit. At 20%, the same $50,000 price reduction lowers the deposit requirement by $10,000.
Important: upfront costs still apply. Buyers should also allow for conveyancing, inspections, adjustments, moving expenses and any duty that remains payable.
3. A quieter market can be more valuable than a lower median
First-home buyers often focus on the published price index. However, the conditions surrounding the sale can matter just as much as the headline number.
In a frantic market, buyers may feel pressured to bid beyond their limit, waive a finance condition or rush a contract review. A calmer market can restore the ability to make a measured decision.
Depending on the property and vendor, buyers may be able to negotiate:
- a lower purchase price;
- a subject-to-finance condition;
- time for building and pest inspections;
- a settlement period that suits their lease or savings plan;
- repairs or inclusions before settlement; and
- a private sale after an unsuccessful auction campaign.
The greatest opportunity may sit with properties that have remained listed for several weeks, passed in at auction, received repeated price adjustments or belong to vendors who have already purchased elsewhere.
Do not confuse caution with inaction: a softer market rewards buyers who investigate carefully and make sensible offers. It does not require them to disappear until every risk has vanished.
4. Why waiting for prices to rise again can cost you negotiating power
Many buyers tell themselves they will enter once the market feels safer. The problem is that “safe” often means prices have already stabilised, confidence has returned and competing buyers have come back.
A first-home buyer who waits for several months of confirmed growth may face:
- higher asking prices;
- more registered bidders;
- stronger auction clearance rates;
- fewer subject-to-finance offers being accepted;
- less time to inspect and decide; and
- vendors who are willing to wait for a better offer.
Buying before the crowd returns does not mean purchasing blindly. It means becoming finance-ready while choice exists and negotiating from a position of knowledge.
The practical lesson: start preparing before you feel completely comfortable. Preparation gives you the option to act; it does not force you to buy.
5. The catch: cheaper property does not always mean easier finance
The same interest-rate increases that place downward pressure on prices can also reduce borrowing capacity. As a result, a property may become cheaper while the lender approves a smaller loan.
Australian Bureau of Statistics data for the March quarter of 2026 showed the number of first-home buyer loan commitments fell 4.3% from the previous quarter. The value of those commitments fell 6.7%. Even so, the number remained 5% higher than one year earlier.
The Reserve Bank has also noted that first-home buyer activity increased after the expanded Australian Government 5% Deposit Scheme began in October 2025, although much of the increase reflected larger average loans rather than a dramatic increase in buyer numbers.
This is why a current borrowing assessment matters. A pre-approval prepared before a rate change, job change, new debt or major expense may no longer reflect the amount available today.
Core point: a lower price helps only when the deposit, approval and repayments still work together.
6. Entry-level properties may remain competitive
Not every part of the market falls at the same speed.
Higher-priced properties can experience larger declines because buyers at that end rely on greater borrowing capacity. Meanwhile, demand may shift towards smaller homes, units, townhouses and more affordable suburbs.
That creates a strange-looking market: premium values can fall sharply while well-located entry-level properties continue attracting several offers.
First-home buyers should therefore compare individual properties rather than relying solely on a city-wide median. Look at recent comparable sales, time on market, vendor price changes, owners corporation costs, condition and the likely demand from investors or other first-home buyers.
Local beats national: the Australian market may be falling while the particular price bracket you want remains resilient. A suburb-by-suburb strategy is essential.
7. The 5% Deposit Scheme can shorten the wait
The Australian Government 5% Deposit Scheme can allow eligible first-home buyers to purchase with a deposit from 5% without paying lenders mortgage insurance, subject to the scheme, lender and property requirements.
In a falling or flatter market, this can create a powerful combination:
- the target property may cost less;
- the required 5% deposit may reduce;
- the buyer may avoid lenders mortgage insurance;
- saving time may shorten; and
- the buyer can enter before competition potentially returns.
However, a small deposit also means the buyer begins with limited equity. A further fall in value can make refinancing or selling difficult, particularly in the first few years.
The right approach is not simply to borrow the maximum available. It is to choose a purchase price that leaves room for normal living costs, future rate changes and unexpected expenses.
Loan Location can explain first-home buyer loan options, including low-deposit pathways and how different lenders assess income, expenses and existing debts.
8. Victorian buyers may gain an extra benefit around $600,000
Eligible Victorian first-home buyers currently pay no land transfer duty on homes with a dutiable value up to $600,000. A concession applies from $600,001 to $750,000.
This means a successful negotiation near $600,000 may do more than reduce the purchase price.
For example, a property marketed above $600,000 may move into the full exemption range if the agreed price and accepted dutiable value are $600,000 or less. Eligibility rules still apply, and dutiable value is generally the higher of the price paid or market value.
Victoria also provides a $10,000 First Home Owner Grant for eligible buyers of qualifying new homes valued up to $750,000.
Threshold opportunity: when a property sits near a duty or scheme limit, a relatively small price negotiation may produce a much larger overall saving.
9. Should you wait for prices to fall further?
They may fall further. They may flatten. A particular suburb may rise even while the national index declines.
The decision should not depend on guessing next month’s median. Instead, consider whether:
- you plan to own the home for several years;
- the property suits your needs rather than merely fitting a headline;
- the price is supported by recent comparable sales;
- the repayments remain manageable if rates move again;
- you retain emergency savings after settlement;
- your employment and income are reasonably stable; and
- the contract and property checks are satisfactory.
A buyer who finds the right home, negotiates a fair price and can comfortably hold it over the longer term does not necessarily need to capture the final dollar of the downturn.
A home is not a day trade: buying $10,000 above the eventual bottom may matter far less than choosing the wrong property, borrowing too much or delaying until competition adds $40,000 back to the price.
10. First-home buyer action plan for a softer market
Step 1: Update your borrowing position
Confirm the loan amount, estimated repayments, required deposit and costs using current rates and lender policy.
Step 2: Set three price limits
- Comfortable range: the price that leaves a strong monthly buffer.
- Upper working range: affordable, but only for the right property.
- Absolute ceiling: the figure you will not exceed, even under auction pressure.
Step 3: Start watching real sales
Advertised prices can be optimistic. Recent settled or unconditional comparable sales provide better evidence of what buyers are actually paying.
Step 4: Inspect before the market feels exciting
Attend inspections, compare properties and learn the local market while other buyers remain cautious.
Step 5: Keep finance and contract protections
Have the contract reviewed and understand your finance, valuation and inspection conditions before committing.
Step 6: Negotiate without becoming reckless
A softer market creates room to ask. It does not make every property a bargain or remove the need for proper due diligence.
Questions first-home buyers are asking
Is now a good time to buy a first home?
It may be a better time to investigate and negotiate than a rapidly rising market. The answer still depends on your deposit, income, debts, repayment comfort, location and intended ownership period.
Will Australian property prices keep falling?
Further falls are possible, but outcomes will vary by city, suburb, price bracket and property type. No forecast can guarantee the exact bottom.
Should I buy before interest rates fall?
Lower rates could improve borrowing capacity, but they may also bring more buyers back into the market. The relevant comparison is the total price, loan size and repayment position available to you now versus later.
Can I buy with a 5% deposit?
Some eligible buyers may use the Australian Government 5% Deposit Scheme or another lender-supported option. Eligibility, property limits, acceptable savings and serviceability requirements still apply.
Could I lose money if prices fall after I buy?
The estimated market value can decline. A loss normally becomes realised if you sell. Lower equity can also restrict refinancing, so a suitable holding period and repayment buffer matter.
The bottom line
First-home buyers may finally be entering the kind of market they have spent years waiting for.
Prices have weakened, sellers face more resistance and buyers can sometimes negotiate without the panic that defines a booming market. Although nobody can guarantee the exact bottom, the conditions that often surround a buying opportunity are becoming visible.
The smartest move is not to rush into any property. It is to become ready while others remain uncertain.
Know your numbers, preserve your buffer, inspect widely and make offers based on evidence. If the right property appears at a fair price, waiting for the market to become obviously strong again may not improve your position.
Final thought: you do not need to predict the exact bottom. You need to be prepared before the next upswing becomes obvious to everyone else.
Ready to find out what you could buy?
Before you start making offers, Loan Location can calculate your current borrowing range, compare lender options and explain the deposit, repayments and upfront costs that apply to your situation.
That gives you a clear buying limit and the confidence to negotiate while the market remains softer.
Note: This is general information only and does not take into account your personal objectives, financial situation or needs. Property values may rise or fall, and past market movements do not guarantee future outcomes. Lending criteria, rates, government scheme rules, grants and concessions can change. Eligibility and approval remain subject to the relevant lender and government requirements. Consider obtaining independent legal, financial and property advice before purchasing.