Is the property market crashing?

Here’s why this headline might actually be good news for first home buyers

If you’re one of the millions of Australians who searched “is the property market crashing” and got hit with a wall of headlines that made your stomach turn, you’re not alone. This month, auction clearance rates hit record lows. Prices are falling in Sydney and Melbourne, and the word “crash“ is being thrown around daily.

But here’s our take on it. What’s happening in the market right now might be one of the better things to happen for first home buyers in years. Here’s why, and what to do about it.

What’s actually going on

House prices just had their first completely flat month in this entire cycle. Sydney and Melbourne prices have dropped a bit from their peaks in late 2025. Auction clearance rates dipped below 50% last week for the first time since the early pandemic days, and almost a quarter of scheduled auctions got pulled altogether.

At the same time, sellers are responding (and even pre-empting) shifts and getting more realistic. The average discount off original asking prices has crept up, which is basically vendor saying they’re ready to negotiate.

So yes, things are shifting, and it’s not all bad news.

A slowdown is not a crash, and that distinction matters for you

A genuine crash usually means prices falling 15 to 20% or more, and that almost always requires a wave of people being forced to sell, which usually means unemployment spiking. Right now, unemployment in Australia is sitting near record lows. Most economists are calling this a cooling period, not a collapse, with some expecting prices to ease by somewhere around 1% this year and maybe 5% across the next couple of years combined. While this is a noticeable change, it’s by no means dramatic.

This means the market isn’t disappearing out from under our feet, as some headlines might suggest. If anything, it’s just taking a beat, and that might actually be a really good time to walk in.

Why this is genuinely good news for buyers sitting on the fence

Think about what’s actually changed for you as a buyer. Fewer people are showing up to bid against you at auction. Sellers are more willing to negotiate than they’ve been in ages. The desperate, bid-above-your-limit energy that’s dominated the market for the last few years has eased off.

That’s not nothing. That’s the difference between walking into an auction feeling like you’re about to be steamrolled and walking in feeling like you’ve got bargaining power.

I think this is one of those moments people may look back on and wish they’d had the confidence to act. Not because prices or interest rates are guaranteed to keep falling (nobody can promise that). But, because the conditions right now are more favourable for first home buyers than they’ve been in a long time. Governments are rolling out stronger support for first home buyers, banks and lenders are competing hard for their business, and sellers are more open to negotiation. That combination gives buyers something they haven’t had much of in recent years: breathing room.

– Jemi Jeng, Founder & CEO, Penny

The other fear first home buyers rarely say out loud

The fear many first home buyers have about buying while the market is softening is simple: what if they buy this month, prices drop next month, and they feel like they made the wrong call? That doesn’t feel like opportunity. It feels risky.

That fear is real. Here’s how we see it.

Most forecasts right now are pointing to prices easing around 1% this year, and maybe around 5% in total over the next couple of years. That is still a real number worth paying attention to, but it’s not a freefall, especially after the years of double-digit growth that came before it.

There is also an important difference between short-term value changes and your actual life in the home. If you are buying somewhere to live for the next 5 to 10 years, a small dip in value the year after you buy does not change much day to day. You are not selling. It only becomes a bigger issue if you are forced to sell while the market is down, which is why having a proper buffer and not borrowing right up to your limit matters so much in a market like this.

So yes, prices can fall after you buy (and interest rates can go up). These are realities of home ownership that shouldn’t be dismissed lightly. But, they should also be weighed against the other side: less competition, more room to negotiate, and a market that is not making you bid against dozens of other people for the one place you actually want. Neither side is risk-free. The question is which trade-off you are more comfortable living with.

What to actually do with this information

Get your numbers locked in now, while conditions are in your favour. If you haven’t had a pre-approval conversation yet, this is the week to have it. Knowing exactly what you can borrow means you can move with confidence the moment the right place shows up, instead of scrambling.

Go to a few auctions just to watch, even if you’re not ready to bid. Seeing a 47% clearance rate in action, properties passing in, vendors negotiating after the auction rather than during it, will genuinely change how intimidating the process feels. Knowledge beats fear every time.

Don’t wait for the “perfect” bottom of the market. Nobody times that correctly, not economists, not your mate who “called the last crash,” nobody. Waiting for the absolute lowest point usually means missing the window entirely.

Buy within your means, not at the edge of them. This matters more in a softening market than a booming one. Leave yourself a genuine buffer rather than stretching to your absolute borrowing limit, so a small dip in value in the first year or two doesn’t turn into real stress.

Ask about vendor discounting directly. Agents are seeing more price flexibility right now than they have in years. If a property has been sitting for a few weeks, there is genuinely no harm in asking what number would actually get it sold today.

Talk to a buyer’s agent if negotiating feels intimidating. This is exactly the kind of market where having someone in your corner who negotiates for a living and has exclusive access pays for itself. Penny can connect you with one who works specifically with first home buyers.

So, what do you do with all this?

You don’t need to predict where the market goes next, and nobody, including us, can promise you the perfect entry point.

The women who come out ahead in moments like this aren’t the ones who waited for certainty, because certainty isn’t coming. They’re the ones who got their numbers solid, bought within their means, and moved when the conditions were reasonable rather than perfect.

If you want help working through whether now makes sense for your specific situation, that’s exactly what Penny is here for.

Sources: Cotality National House Price Index, May 2026. AMP Oliver’s Insights, June 2026. Property Update Australian Property Market Outlook, June 2026.

This article is general information only and does not constitute financial, tax or property advice. Please speak with a licensed financial adviser, mortgage broker or buyer’s agent before making any property decisions. Help me find someone.