Key takeaways:
New property listings across Australia rose 22.4% year-on-year in early May 2026, according to Cotality data.
Higher housing supply and softer auction conditions may give first-home buyers more choice and negotiating flexibility.
The expanded Australian Government 5% Deposit Scheme may help eligible buyers purchase sooner with a smaller deposit and no LMI.
Finance-ready buyers may be in a stronger position to act quickly when suitable properties become available.
For the past few years, many first-home buyers have felt like they were competing in a market moving faster than they could keep up with.
Low housing supply, strong investor activity and rising property prices pushed many buyers to the sidelines, especially across parts of Sydney, Brisbane and Perth.
But conditions are beginning to shift.
Across Australia, more properties are coming onto the market while buyer demand appears to be easing. While that can create uncertainty for existing homeowners and sellers, it may also create opportunities for first-home buyers who are financially prepared and actively searching.
The key is understanding what these changing conditions could realistically mean for buyers.
Nick Jones of Aussie Belmont said the shift had become more noticeable in recent weeks.
“We do have plenty of people looking to sell, and it's a combination of uncertainty with the changes the government's making and ... higher interest rates,” he said.
“There’s more stock on the market, which may create more favourable conditions for buyers.”
More properties are hitting the market
According to the Cotality Housing Chart Pack for May 2026, national new property listings were 22.4% higher than the same period last year and 4.7% above the five-year average covering the 4 weeks to 3 May 2026.
At the same time, growth in home values has slowed. Cotality’s Home Value Index for April reported combined capital city dwelling values increased by just 0.2% in April 2026, while some markets including Sydney and Melbourne have started to record softer conditions.
That combination matters because when more properties enter the market while buyer demand softens, sellers may face more competition from other listings.
In practical terms, that may create:
More homes for buyers to choose from
Longer selling periods for vendors
Greater willingness from some sellers to negotiate
Less urgency compared with highly competitive market conditions
Aussie Buyer’s Agent, Amanda Baldacchino, said buyers were already starting to see more flexibility from sellers in some markets.
“I’m finding agents, especially in the Queensland market which has been really hot for some time, are now ringing me asking ‘Do you have a buyer? Do you have a buyer’,” she said.
“There may now only be one or two people through a property, where once upon a time there would have been a handful of groups going through.
“There's a lot more room for negotiation.”
It does not necessarily mean property prices are falling sharply or that every buyer suddenly has the upper hand. Conditions still vary significantly depending on location, property type, and price point.
But compared with the extremely competitive conditions many buyers experienced in 2021–2024, the market environment may now feel more balanced in some areas.
You might also be interested in: Why some buyers may have more room to negotiate in today’s property market
Auction conditions have softened
Auction markets can often provide an early indication of changing buyer sentiment.
According to Cotality, combined capital city auction clearance rates have remained below 60% since mid-March 2026, while median vendor discounting across the combined capitals widened to 3.1%.
Vendor discounting is the difference between the original asking price and final sale price. Rising discounting levels may suggest some sellers are becoming more flexible to secure a sale.
Gerard Burg, Cotality Head of Research Australia, said the market was beginning to move back towards more balanced conditions after a prolonged period favouring sellers.
“Demand has clearly softened, and at the same time, there’s more stock on the market than there was in late last year,” he said. “So buyers have a bit more time, there’s a bit more chance to look around and consider their options.”
He said conditions still varied significantly between cities and regions, with Sydney and Melbourne currently appearing better supplied than some other capital cities.
For first-home buyers, that could potentially create more room for:
Market condition | What it may mean for buyers |
Higher listing volumes | More choice and less pressure to rush |
Softer auction clearance rates | Fewer highly competitive bidding environments |
Wider vendor discounting | Greater opportunity to negotiate |
Longer selling times | More time to complete due diligence |
Importantly, none of these factors guarantee a cheaper purchase price. Highly desirable properties in tightly held suburbs can still attract strong competition.
However, buyers who are organised and finance-ready may have more flexibility than they did during the peak of the market cycle.
Jones added borrowers were beginning to gain slightly more leverage, although the shift was still in its early stages.
“We are already seeing that, but we're only about a month in to what I think is going to be a pretty hectic 6 months for the rest of the year,” he said.
You also might be interested in: How to win your next home at auction
Some investors may become more cautious
Another factor influencing the market is the Federal Government’s proposed tax reforms announced in the 2026–27 Federal Budget.
The proposed changes would, if enacted limit negative gearing and capital gains tax arrangements for newly purchased established investment properties from 1 July 2027.
While the legislation has not yet passed and details may still change, Treasury modelling released alongside the Budget estimated the reforms could increase owner-occupier access to approximately 75,000 homes over the next decade.
That does not mean investors will disappear from the market. Investor activity continues to remain strong in some locations, particularly areas with tight rental supply and stronger rental yields.
However, some analysts believe the proposed changes may reduce investor competition for some established properties commonly targeted by first home buyers.
Jones said some clients who already had finance approvals in place were now waiting to see how policy changes will unfold.
“I've probably had 10 people over the last two weeks since the budget came out email me and say, ‘Look, we've already got the pre-approval in place. We're just going to sit tight for six months and wait and see what happens’,” he said.
For buyers who have struggled to compete with investors over recent years, that may improve purchasing opportunities in some markets.
You might also be interested in: Should you buy an investment property before 1 July 2027?
Nobody can predict the exact bottom of the market
Trying to perfectly time the property market can be difficult for some buyers.
Property markets move in cycles, but timing those cycles can be difficult. Interest rates, supply levels, employment conditions, and buyer confidence can all shift independently.
Burg said first-home buyers were facing a mix of both opportunities and challenges in the current environment.
“There’s never a perfect time,” he said. “The changes in government policy, particularly around negative gearing, mean there are likely to be fewer investors competing in the market.
“So that provides a little bit of a boost for first home buyers.”
Cotality’s historical analysis of previous Australian housing downturns shows housing corrections can vary significantly in both depth and duration depending on broader economic conditions.
That is why many brokers encourage buyers to focus less on trying to time the market and more on understanding:
What they can comfortably afford
Whether they are financially prepared
What support schemes they may qualify for
Whether the repayments suit their budget and goals
For many first-home buyers, improving market conditions may create more opportunities, but preparation still matters.
The 5% Deposit Scheme has changed significantly
One major change affecting first home buyers over the past year has received less attention than interest rates or property prices.
In October 2025, the Australian Government expanded the Home Guarantee Scheme, including the 5% Deposit Scheme for eligible first-home buyers.
The updated scheme changes included:
Removal of income caps for eligible applicants
Removal of annual place caps and waitlists
Continued ability for eligible buyers to purchase with a 5% deposit without paying Lenders Mortgage Insurance (LMI)
A 2% deposit pathway for eligible single parents or legal guardians through the Family Home Guarantee
That combination may significantly reduce the upfront savings required to enter the property market.
You might also be interested in: 5% deposit vs Help to Buy vs Aussie Boost – Which option could help you buy a home sooner?
What does avoiding LMI actually mean?
Lenders Mortgage Insurance is usually required when borrowers purchase a property with less than a 20% deposit.
Depending on the loan size and deposit amount, LMI can add tens of thousands of dollars to upfront purchase costs.
The table below provides an indicative example only.
Property purchase price | 5% deposit | Estimated LMI without scheme* |
$700,000 | $35,000 | Approximately $29,000–$30,000 |
*Indicative estimate only based on typical LMI ranges. Actual costs vary depending on lender, loan structure, and borrower circumstances.
Under the government scheme, eligible buyers may avoid paying LMI entirely despite purchasing with a smaller deposit.
That can potentially reduce the time required to save for a home purchase.
The scheme applies to different property types
The scheme is not limited to standalone houses.
Eligible buyers may use the scheme for:
Existing homes
New homes
Apartments
Townhouses
House and land packages
Off-the-plan purchases
Property price caps still apply and vary depending on location and region. Buyers can check current suburb-specific caps through the Australian Government postcode tool.
Importantly, buyers do not apply directly through Housing Australia. The scheme is accessed through participating lenders and mortgage brokers, including Aussie Brokers.
Why finance readiness matters more in changing markets
While softer conditions may create more opportunities, buyers still need to be ready to act when suitable properties become available.
Preparation can make a meaningful difference.
Buyers who understand their borrowing power, have documentation organised and have spoken with a broker may be able to move faster when negotiating with vendors.
In some situations, sellers may prefer offers from buyers who already have:
Pre-approval completed
A clear purchase budget
Finance documentation prepared
Shorter finance approval timelines
That does not guarantee success, but it may strengthen a buyer’s negotiating position compared with someone still beginning the finance process.
What first-home buyers may want to focus on right now
Rather than trying to predict exactly where the market moves next, many buyers may benefit from focusing on practical preparation.
That could include:
Understanding your borrowing power
Borrowing capacity can change depending on:
Interest rates
Existing debts
Income and employment type
Living expenses
Deposit size
Speaking with a broker may help clarify what price range is realistic before beginning property inspections.
Reviewing government support schemes
Some buyers may qualify for:
Eligibility rules vary by state and personal circumstances.
Researching local market conditions
National headlines do not always reflect what is happening suburb-by-suburb. Some markets remain highly competitive, while others may now offer greater negotiating flexibility.
Understanding local supply levels, auction activity, and recent sale prices can help buyers make more informed decisions.
Building a realistic budget
Buying costs can extend beyond the deposit itself.
Additional costs may include:
Stamp duty
Loan establishment costs
Moving expenses
Understanding the full purchase costs early can help buyers avoid financial pressure later.
So, what does this mean for first-home buyers?
The market is not suddenly “easy” for first-home buyers. Affordability pressures still remain high across many parts of Australia.
But compared with recent years, conditions may now offer:
More property choice
Slightly less buyer competition in some markets
Greater negotiating opportunities
Government support schemes that reduce upfront barriers for eligible buyers
For buyers who previously felt locked out of the market, that combination may be worth exploring further.
Baldacchino said buyers who are financially prepared may not need to wait for “perfect” conditions before exploring their options.
“If their finance checks out and affordability works, there's no time like the present,” she said.
Importantly, buying a home is still a personal financial decision, not a race to time the market. The right time to buy depends on your own financial position, goals, and level of preparedness.
An Aussie Broker can help you understand your borrowing power, explain which schemes you may be eligible for, and help you compare home loan options from a panel of lenders.
An Aussie Buyer’s Agent may also help provide insight into local market conditions and property search support.
Both conversations may help buyers better understand their options in the current market.
