Should You Buy Now or Wait? The 2026 Market Explained

Cotality's national Home Value Index fell 0.9% in August 2026, the fifth monthly decline in a row, and national values now sit 3.6% below the March peak. Sydney is 7.1% below its February high and falling faster than it did in the 2022-23 correction. On the national median of $912,885, the fall since March is worth about $34,000 to a buyer who waited.

The same buyer lost more on the other side of the ledger. Canstar's analysis of the three 2026 rate rises puts the borrowing capacity lost at $35,800 for a single person on the national average full-time wage and $71,600 for a couple on two of them. The budget fell further than the price. That is the tension every buy-or-wait decision sits on this year, and it is why the answer cannot be a forecast. This article puts numbers on both cases, works through a 12-month wait on a $900,000 purchase, and ends with six questions that decide which side of the line you are on.

What has changed since 2025

The 2025 version of this question was asked in a market waiting for rate cuts. Four things have flipped since.

Rates went up. The RBA lifted the cash rate in February, March and May 2026, to 4.35%. It held on 11 August, but said it would raise rates further "if upside risks materialise" and does not expect inflation back around the midpoint of the target until late 2027. The next decision lands on 29 September, and NAB expects a hike at it.

Prices turned. The national index peaked in March 2026 and has fallen every month since. Through winter, 93% of capital city suburbs recorded a decline. Cotality's estimate of quarterly sales is 15.5% below a year earlier.

Lending tightened. Every hike lifts the rate your loan is assessed at, because APRA's 3-point serviceability buffer sits on top of whatever you will actually pay, so most applications are now tested near 9%. The guide to borrowing capacity in 2026 works through what that does to a typical application.

The bottom of the market found a floor, then started losing it. The First Home Guarantee expansion on 1 October 2025 (5% deposit, no income test, uncapped places) produced 50,633 guarantees issued in its first nine months, on Housing Australia data compiled by Guardian Australia and reported in August. Guarantees issued run ahead of completed purchases, so the settled cohort behind the negative equity numbers is smaller, at roughly 48,000 households. Cotality found homes under the scheme caps gained 6.7% in the six months to March against 3.6% for homes above them, the two-speed market in one number. By August, lower quartile values were falling too, with Cotality's research director Tim Lawless describing lower-priced housing as "becoming less insulated".

The case for waiting, in the forecasters' numbers

Every big four bank now expects prices to keep falling into 2027. Here is what each has published, dated, because the dates matter.

The most recent forecasts are the most bearish. CBA's Trent Saunders wrote on 3 September that "housing market momentum has been significantly weaker than expected over the past three months", and CBA calls its five-capital forecast the largest peak-to-trough decline on record. Westpac's numbers predate the winter falls: Cotality already has Sydney down 6.7% and Melbourne 6.3% for 2026 to the end of August.

Translate those into what is still to come. CBA's 9% national peak-to-trough, from 3.6% below peak today, implies a further fall of about 5.6%. ANZ's 10.6% for the capitals, from 4.6% below, implies about 6.3%. On a $900,000 purchase that is $50,000 to $57,000 still on the table in the banks' own base cases, before a possible September or November hike.

One caveat. In March 2026, CBA expected national prices to rise "a bit over 5%" this year, Westpac about 5%, and ANZ 4.8% across the capitals. Six months later the same desks forecast falls of 4% to 6%. That reversal is the strongest argument against building a plan on any single number.

The case for buying now, in this week's numbers

The wait case is built on forecasts. The buy case is built on conditions you can measure today.

Stock is up. Over the four weeks to 30 August, capital city listings were 24% higher than a year earlier and 8% above the five-year average, even though new listings were 6% lower than a year ago: fewer vendors are choosing to list, so more of what is listed needs to sell.

Competition is down. Combined capital auction clearance finalised at 48.9% for the week ending 23 August and came in at 52.4% preliminary the following week, against 70% at the same point in 2025. Brisbane cleared 31.5%.

Vendors are moving. Homes took a median 35 days to sell in the three months to July, and the national median vendor discount widened to 3.8%. On a $900,000 asking price, the median discount alone is about $34,000. Lawless put it plainly: "longer selling times, larger vendor discounting and persistently low auction clearance rates all point to a buyer's market, yet buyers are lacking the confidence to transact at the moment."

That last clause is the opportunity. Building and pest clauses, finance clauses and long settlements, all of which buyers waived at 70% clearance, are back on the table, and the guide to buying in a falling market covers how to use them. The leverage goes when confidence returns.

Waiting is not free either. Rents rose 5.7% over the year to August, vacancy is 1.9%, and the national gross rental yield of 3.8% is the highest since September 2019.

The arithmetic of waiting: a $900,000 purchase

Put the two cases in one table. A $900,000 home, a 20% deposit, a 30-year loan at 6.24% (the RBA's July 2026 average for new owner-occupier variable loans), and rent on a comparable home at the national gross yield of 3.8%, about $658 a week. The wait scenario assumes prices fall a further 5%, close to the banks' central cases.

Excludes stamp duty, rates, insurance and maintenance (which favour the renter), rent increases, and the fact that the waiting buyer is buying a different house in a different market.

If the 5% fall arrives, the buyer who waited paid $45,000 less and spent about $10,500 less on housing along the way (rent of $34,200 against interest of $44,689): roughly $55,500 ahead before holding costs. Only if prices rise more than about 1.2% over the year does buying now come out ahead on these figures.

Rates cut the other way. One 0.25% hike adds $112 a month to the smaller loan, about $1,344 a year, trivial against a $45,000 price move. But the same hike takes roughly $24,000 off a couple's borrowing capacity, or $12,000 off a single's (Canstar's three-hike figures divided by three). Two hikes and a couple has lost $48,000 of capacity, more than the entire 5% price fall. Price falls beat rate moves on repayments. Rate moves beat price falls on borrowing capacity.

So the worked example relocates the question rather than resolving it. If your ceiling is set by your deposit, waiting for the forecast fall is cheap and the arithmetic above favours it. If it is set by a bank's calculator, every RBA meeting between now and your purchase is a coin toss on whether the cheaper house is still within reach.

How the answer changes by buyer type

Owner-occupiers with a long horizon. Cotality's index is up 66.5% nationally over the ten years to August 2026, a decade that included the 2018-19 and 2022-23 corrections. If you will hold for seven to ten years, a further 5% fall is a paper number you never realise, and the price you negotiated matters more than the month you signed. For this group the question is price rather than timing: a price set off the last 60 to 90 days of sales, with a margin for further drift.

Buyers with a 5% deposit. A 95% LVR buyer twelve months into a loan is technically underwater once prices fall about 6.1%, but can no longer sell and clear the debt once they fall about 2.6%, because selling costs eat the rest. The banks' central case is a further 5% to 6%. If there is any realistic chance of needing to sell within three years, the arithmetic favours waiting or a larger buffer over a forced sale. If you are staying put and the repayment survives another hike, the paper loss forces nothing. The negative equity guide runs the full table.

Investors. The grandfathering cutoff for the Budget's tax changes was Budget night, 12 May 2026. An established property bought now loses negative gearing from 1 July 2027; only new builds keep it. The RBA's July average for new investor variable loans is 6.41%, against gross yields of 3.3% in Sydney, 4.0% in Melbourne and 3.8% nationally, and Lawless notes yields "would need to rise substantially before rental income offsets holding costs". Unless the purchase works on cash flow without negative gearing, or it is a new build, the wait case for investors is the strongest of the four. The Budget changes explainer covers the detail.

Upgraders. If you are selling and buying in the same market, the price level matters less than the gap, and the gap is narrowing because the top end has fallen faster all year. The risk is sequencing: with clearance under 50% and 35 days on market, selling is the uncertain half, and committing to a purchase before the sale is done is where the exposure sits. The trading up guide covers bridging loans and low valuations.

Six questions to answer before you decide

Forecasts describe the market. These describe you.

1. Is your budget set by your deposit or by the bank's calculator? For a couple, one more hike takes about as much off capacity as a 2.7% fall takes off a $900,000 home.
2. Could you hold the property for seven years without being forced to sell? If yes, a further fall is a paper loss. If no, it is a real one.
3. Do the repayments work at today's rate plus 0.50%, without cutting essentials? The bank tested whether you could pay at 9%. This tests whether you would be comfortable.
4. Is your pre-approval dated after 11 August, and will it survive 29 September? A pre-approval issued before a hike is reassessed at formal approval.
5. Have you priced the property off sales settled in the last 60 to 90 days, rather than off the asking price? The asking price was set in a different month of a falling market.
6. Would you still want this property if it fell another 10%? If not, you are buying a discount, not a home, and discounts on compromised stock are usually fair value.

Four or more yes answers and the evidence leans towards acting, with conditions in the contract. Three or fewer and the cost of waiting is lower than the cost of a mistake. It is a framework, not a verdict, and a broker or licensed adviser can test it against your actual numbers.

Frequently asked questions

Will prices keep falling in 2027?

The published big four forecasts say yes for at least the first part of the year: CBA has the trough around April 2027, ANZ expects capital city values to fall a further 3.4% over the calendar year before recovering late in it, and Westpac, the outlier, expects modest growth. All of them condition the timing on rate cuts arriving in 2027. Treat the direction as more reliable than the date.

Do rate cuts always push prices up?

Not always, but the mechanism is strong. Each 0.25% cut returns roughly $12,000 of borrowing capacity to a single average earner and $24,000 to a couple, and with new listings already 6% below last year, that money competes for limited stock. Cuts fail when they arrive alongside rising unemployment or tighter credit, which is why the banks pencil in 2027 recoveries of 1% to 5% rather than a rebound.

Is it better to buy before or after a rate cut?

The buyer who purchases before a cut pays a lower price with a smaller budget, then gets the benefit through the lower repayment. The buyer who waits gets the bigger budget and competes with everyone else who waited. If the banks' timelines hold, the first cut is eight to twelve months away, and the falls forecast before then are worth more on a $900,000 home than one cut is worth on repayments.

What to do now

Get a written borrowing assessment at today's rates and ask what one more hike does to it. A mortgage broker can show you the spread between lenders on the same file, which can be larger than the price fall you are waiting for. Keep the pre-approval current through every RBA meeting.

Watch the signals rather than the headlines. Clearance rates, listings against the five-year average, days on market and vendor discounting are all published weekly or monthly, and the five signals guide explains how to read them. When two of them turn, the leverage starts to go.

Search on evidence, not asking prices, and put conditions in every offer. If you would rather have someone doing that full-time on your side of the table, GoMatch matches you with a vetted buyer's agent for free, and a good one will tell you to walk away as readily as to bid.

The banks have already rewritten their 2026 numbers once. A further 5% fall is worth $45,000 on a $900,000 home; the median vendor discount on the same home is about $34,000 today. This is general information, not personal advice, and the figures, current at 7 September 2026, move monthly.

Sources

1. Cotality, Home Value Index, "Housing downturn spreads as 93% of capital city suburbs record winter value falls", index results as at 31 August 2026, September 2026.
2. Cotality, Monthly Housing Chart Pack, August 2026, as reported by Property Update, "Everything you need to know about the state of Australia's property markets in 20 charts", 16 August 2026.
3. Australian Broker, "Auction clearance rates ease to 52.4% as listings outpace demand", 31 August 2026 (Cotality preliminary results, week ending 30 August 2026).
4. Reserve Bank of Australia, "Statement by the Monetary Policy Board: Monetary Policy Decision", 11 August 2026.
5. Reserve Bank of Australia, "Coming Up", 2026 Monetary Policy Board meeting dates, accessed 7 September 2026.
6. Reserve Bank of Australia, Interest Rates statistics, lenders' interest rates, July 2026.
7. Mortgage Professional Australia, "Borrowing capacity falling faster than house prices as rate hikes bite", 2 June 2026, citing Canstar analysis and Westpac forecasts.
8. Aussie, "What experts predict for the RBA's September 2026 interest rate decision", 31 August 2026.
9. Smart Property Investment, "Downturn to see properties fall by 10 per cent", 3 September 2026 (CBA forecast).
10. MacroBusiness, "Aussie banks forecast biggest house price falls on record", 3 September 2026.
11. Smart Property Investment, "Capital city house prices tipped to fall 10% as downturn deepens", 12 August 2026 (ANZ forecast).
12. NAB, "NAB Housing Monitor August 2026", 4 August 2026.
13. Westpac IQ, "Housing forecast update", 26 May 2026; Australian Property Update, "Housing market to weather tax and rate shock: Westpac", 24 June 2026.
14. Australian Property Update, "Big banks diverge on housing forecasts", 12 March 2026, and "RBA move prompts big banks to revise rate and housing forecasts", 9 February 2026.
15. Cotality, "First home buyer scheme fuels competitive tensions at the lower priced end of housing market", 23 April 2026.
16. MacroBusiness, "50,000 first home buyers face 'painful adjustment'", 7 August 2026, citing Housing Australia data compiled by Guardian Australia; Elite Agent, "Regional first-home buyers under 5% deposit scheme post double-digit equity gains", 17 August 2026, reporting PropTrack analysis of Housing Australia and PropTrack Home Price Index data.