IN BRIEF
- Major banks are forecasting price falls — but economists warn buyers not to expect a clear bottom.
- Elevated listings and slower sales are giving buyers more choice and less urgency.
For more than two years, Mary Latham has spent weekends walking through open homes across Sydney’s inner west.
The 37-year-old has inspected properties in the Canada Bay area most weeks for the past two years, and was initially held back from buying by prices that were simply too high.
Now she is grappling with a different concern.
With major banks warning housing values could soften, Mary worries buying today could mean missing the opportunity to secure a bargain tomorrow.
After months of diverging forecasts, Australia’s major banks are increasingly converging around a weaker outlook for housing.
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ANZ now expects capital city house prices to fall 2.1 per cent in 2026, a sharp reversal from its earlier forecast for 2.8 per cent growth, while NAB is forecasting values will decline by around 2 per cent after previously predicting gains.
Westpac has also reported applications for investor housing loans fell 20 per cent in the three weeks following the May budget, another sign changing market conditions may already be influencing buyer behaviour.
But as buyers grow increasingly reluctant amid fears prices could fall further, economists say the key problem for buyers holding off is that the market rarely sends a clear signal that it has reached the bottom.
The complexity of housing markets
Tim Lawless, research director at property data company Cotality, told SBS that while many buyers imagine housing cycles as a clean curve, the reality is usually far less obvious.
"Picking the precise peak and trough of the market is probably more a matter of luck than market aptitude," he said.
Instead, he said markets tend to move through periods of gradual change and pointed to Sydney’s recent slowdown as an example, where growth momentum eased before values flattened and then moved into more consistent declines.
So how do you know conditions might be stabilising?
Lawless said no single indicator tells the full story and buyers should instead watch for changes across a range of measures, including home values and whether declines are starting to slow, listing volumes and stock levels, auction clearance rates, days on market and vendor discounting.
But independent property economist Cameron Kusher told SBS News that economic indicators often move before prices fully recover, but lower clearance rates and longer selling times can indicate buyers and sellers are becoming further apart on price expectations.
"You’ll probably start to see inflation coming down, stock starting to move and consumer sentiment improving," he said.
Waiting too long carries its own risk
Dr Meg Elkins, associate professor in economics at RMIT University, said buyers often focus heavily on avoiding losses, with behavioural economics showing people often fear overpaying more than they value getting the right property.
"It’s the biggest purchasing decision people often make in their lives, so we tend to second-guess ourselves," she said.
But Elkins said the challenge is housing decisions are rarely just about price, with location, lifestyle, long-term plans and wellbeing also shaping what makes a property worthwhile to the buyer.
"There’s always that FOMO [fear of missing out] bit that comes in, people miss out on the bottom in the same way they miss out on a discount.
"We get very retrospective on all of the things happening around us, but recognising the bottom is usually a hindsight element," she said.
Experts say focus on protection, not perfection
For buyers worried prices could continue to soften after purchase, experts say resilience matters more than precision.
Rather than trying to pick the exact bottom of the market, economists said buyers should focus on making decisions they can sustain over the long term, including buying below maximum borrowing capacity where possible, keeping a financial buffer and considering how long they expect to hold the property.
Elkins said uncertainty around interest rates and broader cost-of-living pressures has made stretching finances riskier.
Kusher said buyers should remember housing is typically a long-term asset, and urged them to research which types of homes tend to retain value and avoid making decisions based solely on short-term price movements.
"If you’re planning to hold the asset for five to 10 years, a moderate fall in prices may not matter as much," he said.
Lawless agreed that for most homeowners, market cycles tend to smooth out over time.
For Latham, that does not completely remove the anxiety.
But after two years of waiting, she is starting to think differently.
"There's so much information around and everyone seems to be saying something different," she said.
"You’ve got economists saying one thing, real estate agents saying another and sometimes it doesn’t line up with the data I’m seeing.
"I just don’t feel comfortable right now ...The journey to finding my home has already been so emotionally exhausting and at times, disheartening.
"I’d hate for the biggest financial decision of my life to end up being a mistake that i have to regret."
Disclaimer: The information in this article is general in nature and is not intended as financial advice. You should consult with a licensed professional to make the decisions that are right for you.
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