Is now a good time to invest in property in Australia?
Spring is traditionally the busiest selling season in Australian real estate, and this year it arrives against a mixed backdrop. Four months on from a Federal Budget that reshaped negative gearing and capital gains tax, and after three Reserve Bank rate rises earlier in 2026, Sydney and Melbourne are recording price falls while several other capital cities keep growing.
It’s the kind of environment that tends to produce two very different reactions among prospective investors. Some see falling headlines and decide to wait until the picture is clearer. Others see softer prices and reduced competition as the opening they’ve been waiting for.
Is now a good time to invest in property in Australia?
For a long-term investor, yes, provided the individual property and market meet strong fundamentals. Short-term softness in Sydney and Melbourne doesn’t change the underlying case for property as a long-term asset class.
Most investors should be looking at property as a long-term hold in any case, given the entry costs of stamp duty and legal fees, and the exit costs of agents’ fees, legal fees and potential capital gains tax. In that timeframe, the fundamentals that matter, a resource-rich economy, a comparatively stable job market, high migration and limited housing supply, haven’t gone anywhere.
Are Australian property prices falling in 2026?
Yes, however Corelogic data suggests that the falls have been fairly modest in most capital cities. Sydney and Melbourne have seen the most significant declines between 3.90% and 4.70% respectively over the last quarter. In the September quarter, the combined capital city prices have fallen -3.7%.
The Reserve Bank lifted the cash rate three times through 2026, taking it to 4.35% by May, before holding steady through the following months. That, combined with the Federal Budget’s changes to negative gearing and capital gains tax, has cooled both prices and lending in the two largest capitals. ABS figures show investor loan commitments fell 8.6% in the June quarter, the sharpest quarterly drop since early 2023, and Domain and the major banks are forecasting further, modest price falls in Sydney and Melbourne over the year ahead.
The falls have been driven largely by the run-up in interest rates, compounded by investor sentiment following May’s Budget, which weighed on both established-property investors and first home buyers, particularly in the markets where prices had run hardest. Cities with tighter supply and less exposure to that sentiment shift have kept growing through the same period.
This divergence is also showing up in investor hesitancy more broadly. Lending volumes are down, and a large share of would-be investors are currently sitting on the sidelines, waiting to see how things settle. Binnari’s own client base is weighted toward brand-new property, and here we’ve continued to see a steady flow of activity, partly because the Budget’s changes have made new-build property relatively more attractive from a tax perspective.
Is a property correction a good time to buy?
Often, yes. One of the more persistent misconceptions is that a falling market is automatically a bad time to buy.
“Generally, a correction means it’s a great time to buy… if you see the market off, quite often that is the time to get in.” – David Hancock, Director at Binnari Property
This pattern has played out many times before. Once a correction nears its floor, it historically hasn’t stayed there for long. Whether the recovery in Sydney and Melbourne begins in the next month or two, or later into 2027, the underlying pattern has tended to repeat itself cycle after cycle: a period of softness, followed by a bottom, followed by a recovery that moves faster than most people expect.
What drives long-term property growth?
Not the interest rate cycle, and not tax settings. The factors that actually determine whether a property performs are supply, demand, population growth and owner-occupier appeal.
“Interest rates only really come into it from your ability to afford to purchase and hold the purchase, and how much a bank will lend you… the long-term fundamentals are always the important factor.” – David Hancock, Director at Binnari Property
The fundamentals we look for
Before recommending a market or a property, we look for areas dominated by owner-occupiers rather than investors, where supply is genuinely constrained, and where the property type is one that local owner-occupier buyers actually want.
“It’s really important to buy properties that are in areas dominated by owner occupiers, that have limited supply and don’t have the ability to bring on [more]… You want to buy a house or a townhouse in an area that’s been sought after by local families, where there is limited supply and where the local buyer is in strong demand.” – David Hancock, Director at Binnari Property
Suburbs saturated with new apartment stock or unlimited land supply aimed almost entirely at investors, where there’s no natural pool of owner-occupier buyers to support resale value, generally sit outside that criteria.
Vacancy rates and future supply are also part of how we assess owner-occupier appeal and long-term market fundamentals. You can read more about this in our analysis of Australia’s rental crisis and what low vacancy rates mean for property investors.
Does leverage and tax still matter?
New-build properties currently retain access to the existing negative gearing and capital gains tax concessions, which has made them more attractive under the new rules. But tax alone has never been a good enough reason to buy a property, and it isn’t what drives growth over the long run. Governments change, and tax settings move with them.
What doesn’t change is the reason property has historically built wealth for Australians in the first place: the ability to leverage a relatively small deposit into a much larger asset.
“One of the real benefits of buying property is the ability to leverage or borrow, because you can take a small amount of money and basically invest a lot more money. That’s what creates a lot of wealth for Australians… but it’s fundamentally important that it’s still a quality asset with the right fundamentals, because a change in government might change the tax situation.” – David Hancock, Director at Binnari Property
If the underlying property is sound, an investor should do well over the long term regardless of which tax scheme happens to be in place at any given time. For a closer look at exactly what changed and how it affects holding costs, see “Should I buy a new build to keep negative gearing benefits?”.
Should investors wait for interest rates to fall?
Not necessarily. Rates affect what you can afford to borrow today, but timing a purchase around a one-to-three-month rate window is very difficult against a ten-to-thirty-year investment horizon.
“Timing a market when you’re investing for ten, twenty, thirty years, in a one, two, three month window is nigh on impossible. History tells us that property markets around the country don’t stay down for long, and the rebound tends to happen quite quickly. Quite often when you’re trying to time a market, if you wait a month, two months, three months, you can often miss out on that five or ten per cent rebound.” – David Hancock, Director at Binnari Property
Most economists aren’t expecting the first rate cut anytime soon and some even think we may get a rate hike, so there’s a reasonable case that waiting could be rewarded, at least at the margin. But the risk cuts both ways: if rates hold or the recovery starts earlier than forecast, waiting can also mean paying more, not less.
The clearest recent example of this dynamic is Covid. At the time, some economists were talking about falls of 20 to 40%.
“If you want to look at a market where people were talking about an Armageddon scenario, you’ve only got to go back as far as Covid. Once the market got nearer to the bottom, it quickly rebounded. It recovered itself within a matter of months, and then it started to put on extra growth.” – David Hancock, Director at Binnari Property
We weren’t able to point to a specific recent client transaction to illustrate the current correction in the same way; the market-wide Covid comparison above is the example we’d point to instead.
The risk in waiting for rates to fall, or for the market to bottom precisely, is that the recovery has historically happened faster than expected once it starts and the media is typically two steps behind. An investor who waits for confirmation that the bottom has passed can end up buying after a meaningful part of the rebound has already occurred.
How do you decide, market by market?
This isn’t a national call of “up” or “down.” A single capital city figure can mask enormous variation between suburbs, and even between property types within the same suburb, so a headline that says “Sydney is down 3%” tells you very little about whether a specific property type i.e. apartment or house, in specific price band and in a specific pocket, is actually a good buy right now.
Instead, the process starts by identifying markets and property types with strong owner-occupier demand, constrained future supply, and limited exposure to investor-driven oversupply. From there, individual properties are assessed against those criteria: who is likely to want to live there, how much competing new stock is likely to be built nearby, and whether the price being asked reflects genuine long-term value rather than short-term sentiment. Learn more about our research process.
There’s also a wider context worth keeping in mind. There are really only a handful of ways to build wealth over time: inheriting it, starting a business, or investing in appreciating assets like shares and property. Sitting entirely in cash means inflation gradually erodes purchasing power, so at some point, most people who want to build long-term financial security need to be invested in one or more of these asset classes.
Key takeaways for investors
- Sydney and Melbourne are currently softer, while several other capitals continue to remain stable; a national headline figure doesn’t tell you what’s happening in a specific market or sub section of that market
- A correction is not the same as a crash, and Australian property markets have historically rebounded faster than expected once conditions turn
- Interest rates and tax settings mainly affect what you can afford to buy and hold today; long-term performance is driven by supply, demand, population growth and owner-occupier appeal
- Trying to time short-term rate movements against a ten-to-thirty-year investment horizon is very difficult, and waiting has its own cost
- The right approach is market-by-market and property-by-property, not a blanket call on “the market.”
Are you weighing up whether now is the right time to invest, given your own goals, borrowing position and strategy? Chat to Binnari Property today for an obligation-free discovery call.
