Is now a good time to buy your first home? Here’s what the facts say

Nobody can tell you the perfect moment to buy, including the experts. What we can do is set out where the market stands right now, both the good news and the bad, so you can decide what’s right for you.

What’s working in your favour

Prices are falling. Australian house prices have now dropped for five months in a row, and the decline has spread to 93% of suburbs in the capital cities. Cotality’s index fell 0.9% in August, putting the national median at $912,885. Sydney had the biggest fall of the capitals, down 1.4% for the month, with a median of $1.2 million.

You have more time and more room to negotiate. Nationally, homes now take a median of 39 days to sell, compared with 28 days a year ago. With sellers more willing to negotiate, buyers can take their time and push for a price that reflects current conditions.

Fewer investors are competing with you. In the June quarter, investor lending fell 8.6%, the steepest quarterly drop in almost four years. The tax rules have also changed. For established homes bought after 7:30pm on 12 May 2026, investors will lose negative gearing from 1 July 2027, meaning they can no longer offset rental losses against their salary. The government expects the changes to move around 75,000 properties from investors to homeowners.

You may only need a 5% deposit. Since 1 October 2025, all first home buyers can use the government scheme to buy with a 5% deposit. There’s no limit on places, no income cap, and higher property price caps. The government guarantees up to 15% of the property’s value, so you avoid Lenders Mortgage Insurance, which normally applies below a 20% deposit. Keep in mind that the scheme is a guarantee to the lender, not a cash grant, and your loan still has to pass the lender’s normal checks.

What’s working against you

Interest rates are rising. The Reserve Bank raised rates by a combined 0.75% during 2026, then paused in August. Its next decision is on 29 September, and many economists expect an increase to 4.6%. All four big banks now forecast another rise before the end of the year.

Illustration only: on a $600,000, 30-year loan, a 0.25% rise (for example, from 6.00% to 6.25%) adds roughly $95–100 to monthly repayments.

The cheaper end of the market is holding up best. The largest falls are in expensive homes: top-end house values in Sydney and Melbourne are now more than 10% below their peak. Competition has stayed strongest for lower-priced homes, where first home buyers, investors and upgraders are all bidding. In other words, the homes most first home buyers are looking at haven’t fallen as much as the headlines suggest.

A small deposit leaves less room for error. Borrowing 95% of the price leaves you more exposed if prices fall or rates rise. Cotality warned that recent buyers with small deposits can quickly end up owing more than their home is worth.

So, is now a good time?

It depends less on the market than on your own situation. Three questions matter most:

1. Could you still comfortably make your repayments if rates rise again?

2. Do you plan to stay in the home for many years?

3. Is your income stable?

If you answered yes to all three, Cotality’s research team offers a useful perspective: for buyers planning to hold for the long term, trying to pick the bottom of the cycle rarely works, because you almost certainly won’t find the exact low point.

If you answered no to any of them, waiting and saving a bigger buffer is a perfectly sensible choice.

Before you decide

• Get pre-approved so you know your real budget at today’s rates.
• Check the 5% Deposit Scheme price cap for your area at firsthomebuyers.gov.au.
• Look into your state’s stamp duty concessions for first home buyers.
• Build a buffer for higher repayments before you commit.

Not sure where you stand? Book a free chat with RiseWell Finance. We’ll look at your numbers and the schemes you qualify for, and give you a clear picture with no pressure.

This article is general information only and doesn’t take your personal circumstances into account. It isn’t financial, tax or legal advice. Figures were correct as at 21 September 2026.

Sources

• Cotality: High-end homes lead market downturn (Sept 2026 Chart Pack): https://www.cotality.com/au/insights/articles/high-end-homes-lead-market-downturn-as-affordable-properties-prove-resilient
• CommBank: Housing prices continue to fall: https://www.commbank.com.au/articles/newsroom/2026/09/buyers-market-housing-prices-continue-downturn.html
• ABC News: Housing downturn accelerates: https://www.abc.net.au/news/2026-09-01/property-prices-downturn-accelerates/107098796
• Rate Money: Property Market Update, September 2026: https://ratemoney.com.au/news/property-market-update-september-2026
• The Adviser: Home loan commitments plummet as investor lending slumps: https://www.theadviser.com.au/borrower/48814-home-loan-commitments-plummet-as-investor-lending-slumps
• William Buck: Federal Budget 2026, Negative gearing: https://williambuck.com/tools/federal-budget-2026/negative-gearing/
• ABC News: Budget 2026 negative gearing and CGT changes: https://www.abc.net.au/news/2026-05-12/budget-2026-government-breaks-promise-negative-gearing-cgt/106669860
• Treasury: Supporting people into home ownership: https://treasury.gov.au/policy-topics/housing/home-ownership-support
• ABC News: First home buyer scheme and lower-end prices: https://www.abc.net.au/news/2026-04-23/first-home-buyer-scheme-pushing-up-price-of-cheaper-housing/106593276
• ABC News: RBA leaders on interest rates: https://www.abc.net.au/news/2026-09-18/rba-governor-talks-interest-rates-at-parliamentary-hearing/107167676
• Aussie: Expert predictions for the RBA’s September decision: https://www.aussie.com.au/insights/news/expert-predictions-rba-rates/
• Dux Properties: RBA cash rate holds at 4.35%: https://www.duxproperties.com.au/insights/rba-interest-rates-september-2026/
• Global Property Guide: Australia price history: https://www.globalpropertyguide.com/pacific/australia/price-history