The Australian residential property market is experiencing a notable slowdown this spring, with a significant increase in sellers reducing their asking prices amid waning buyer activity. Traditionally the busiest selling season, this spring has seen a sharp decline in transactions and rising inventory, driven largely by higher interest rates and uncertainty following the recent federal budget.
According to housing research firm Cotality, the number of homes sold in September was 20 percent lower than the same period last year. At the same time, new listings are entering the market faster than buyers are purchasing, resulting in a 19.1 percent rise in total advertised homes across major capital cities.
This shift has led to a growing share of sellers—4.4 percent nationally—discounting their properties, the highest rate observed in five years. Additionally, the average time a home spends on the market has nearly doubled since the May federal budget, increasing from 22 days to 39 days.
Cotality's research director Tim Lawless attributed the sluggish market activity to several factors, including reduced borrowing capacity due to elevated interest rates, tight household budgets, and generally weak consumer confidence. He noted that even buyers in a strong financial position are hesitant to finalize purchases amid falling property values and the prospect of further Reserve Bank interest rate hikes before the year’s end.
Matt Lahood, chief executive of the national real estate network The Agency, emphasized the rapid pace of market change, cautioning against relying on data from more than a few months ago. He suggested that as the market evolves, particularly if the Reserve Bank raises rates again in November, buyers and sellers will effectively be entering a new market environment.
Sydney homeowners Brian and Marilyn Orr, who have lived in their Lindfield East residence for nearly five decades, exemplify sellers adapting to the market downturn. The couple has listed their three-bedroom home with a guide price of AUD 3.2 million, approximately AUD 1 million less than a comparable property sold on their street last year. They remain prepared to adjust their expectations ahead of their auction scheduled for October 31.
Ray White Upper North Shore agent Jessica Cao, handling the Orrs’ sale, highlighted the importance of clear and realistic discussions with sellers about market conditions to manage expectations successfully. She noted while the market is not booming as it was the previous year, it is also not collapsing.
From the buyer’s side, a recent Westpac Home Ownership Report reveals that one in five prospective purchasers are offering lower bids, while about 25 percent are waiting for price and interest rate stability before entering the market. Carolyn McCann, Westpac’s consumer chief executive, described the prevailing market sentiment as one of caution rather than crisis, with many weighing conflicting economic signals amid cost-of-living pressures.
The report also found that around 40 percent of potential first-home buyers currently consider it an unfavorable time to buy, despite the federal government’s efforts to make homeownership more accessible through reforms to negative gearing and capital gains tax provisions.
Looking ahead, Lawless indicated the housing market’s trajectory for the remainder of spring will largely depend on buyer activity. With four interest rate increases already implemented this year and the Reserve Bank expected to meet twice more before 2027, substantial challenges are anticipated through the end of the year, potentially curbing the usual seasonal sales uptick.