Is 2026 a Good Time to Buy Property in Australia?

"Is now a good time to buy?" is the question every prospective property buyer asks, and the answer is never straightforward. The Australian property market in 2026 presents a mixed picture: interest rates are beginning to fall, prices have recovered from the 2022-2023 correction, supply remains chronically short, and affordability is a genuine barrier in many markets. Whether it is the right time for you depends on your personal circumstances, your goals, and which segment of the market you are looking at.

This article examines the key factors you should consider, presents the arguments for buying now versus waiting, and explains why the answer differs depending on whether you are a first home buyer, an investor, or an upgrader.

Factors to Consider Before Buying

Interest Rates and Borrowing Capacity

The RBA began cutting the cash rate in early 2026 after holding rates steady through most of 2025. Further cuts are expected through the year, with economists forecasting the cash rate to settle around 3.5-3.75% by year end. Each 25 basis point cut effectively increases your borrowing capacity by 2-3%, meaning you can qualify for a larger loan without changing your income.

However, rate cuts are a double-edged sword. While they improve your purchasing power, they also increase competition by allowing other buyers to borrow more. This additional demand tends to push prices higher, potentially offsetting the benefit of lower repayments. Buyers who wait for rates to bottom out often find themselves competing in a hotter market with higher prices.

Your Personal Financial Position

Market conditions matter, but your personal finances matter more. Before deciding when to buy, honestly assess:

• Deposit size: Do you have a 20% deposit to avoid lenders mortgage insurance (LMI)? If not, the cost of LMI (which can be $10,000-$30,000 depending on the loan size) affects your overall cost of entry.
• Job security: A stable income is essential for servicing a mortgage. If your employment situation is uncertain, it may be prudent to wait regardless of market conditions.
• Emergency buffer: Financial advisers typically recommend having 3-6 months of expenses saved beyond your deposit to handle unexpected costs after purchase.
• Existing debts: HECS/HELP debt, car loans, credit cards, and buy-now-pay-later balances all reduce your borrowing capacity and should be factored into your decision.
• Lifestyle stability: If you are likely to relocate for work within 2-3 years, the transaction costs of buying and selling (stamp duty, agent fees, legal costs) may outweigh any price growth.

Use the stamp duty calculator to understand the full upfront costs of purchasing in your state.

Where We Are in the Market Cycle

Property markets move in cycles of growth, peak, correction, and recovery. As of early 2026, most Australian markets are in the growth or recovery phase. Prices are rising, transaction volumes are increasing, and auction clearance rates are strong. This is typically a better time to buy than at the peak of a cycle, though not as favourable as buying during a correction (when prices are falling and competition is low).

Arguments for Buying Now

• Rate cuts are coming: Falling interest rates historically drive property prices higher. Buying before the full rate cutting cycle plays out means you may benefit from both lower repayments and price appreciation.
• Supply shortage is structural: Australia's housing undersupply is not being resolved quickly. New dwelling construction is running well below demand, meaning the fundamental price support will persist for years.
• Rents are high: If you are currently renting, the rent you are paying represents a significant cost that builds no equity. In many suburbs, mortgage repayments on a comparable property (after the initial deposit) are similar to or only slightly above current market rents.
• Government incentives: First home buyer concessions, stamp duty exemptions, the First Home Guarantee scheme (allowing 5% deposits without LMI), and various state-level grants are currently available and may not be permanent.
• Wealth accumulation: Every year of price growth you miss as a renter is wealth you do not accumulate. Even in a moderate growth environment (5% per year), delaying by one year on a $700,000 property costs you $35,000 in missed equity growth.

Arguments for Waiting

• Prices may still correct: Some markets, particularly Sydney and parts of Melbourne, are showing signs of affordability stress. A global economic shock, sharp rise in unemployment, or policy changes could trigger a correction.
• Saving a larger deposit: A bigger deposit means a smaller loan, lower repayments, and avoiding LMI. If you can save an additional $50,000-$100,000 over 12 months, the interest savings over a 30-year mortgage could be substantial.
• Policy changes may help buyers: Proposed reforms like shared equity schemes, stamp duty replacement with land tax, and expanded first home buyer grants could improve affordability for those who wait.
• Better market knowledge: More time allows more research. Understanding your target suburb inside and out — its growth drivers, risks, and comparable sales — helps you make a better purchase decision when you do buy.

Rent vs Buy: The Financial Comparison

The rent-versus-buy calculation depends heavily on your specific numbers, but here is a simplified comparison for a $700,000 property in 2026:

• Buying costs: $140,000 deposit (20%), approximately $25,000 in stamp duty and legal fees, monthly mortgage repayment of approximately $3,200 (at 5.5% on a $560,000 loan).
• Renting equivalent: Approximately $600-$700 per week ($2,600-$3,000 per month) for a comparable property, plus the opportunity cost of not investing the deposit elsewhere.

In this scenario, the monthly cost of buying is higher, but you are building equity and benefiting from any price growth. If the property grows at 5% per year, you gain $35,000 in equity in year one alone — more than the cost difference between renting and buying. As interest rates fall, the gap narrows further.

The breakeven point (where buying becomes clearly better than renting) is typically 5-7 years in the current market, accounting for transaction costs, maintenance, and the opportunity cost of your deposit.

Different Perspectives

First Home Buyers

For first home buyers, the biggest barrier is the deposit. If you have saved a sufficient deposit and your income comfortably services the mortgage with a buffer, current conditions are reasonable. Rate cuts will reduce your repayments over time, and you start building equity instead of paying rent. Take advantage of first home buyer stamp duty concessions and government guarantee schemes where eligible.

Investors

For investors, the decision is more nuanced. Yields have been compressed in many capital city markets, meaning cash flow is tight. However, rate cuts improve cash flow positions, and the rental market remains extremely tight. Focus on suburbs with strong yield-to-growth ratios, and ensure your numbers work even if rates do not fall as much as expected. See our property investing guide for a comprehensive framework.

Upgraders

If you already own a property and want to upgrade, the market conditions for buying and selling are roughly the same — you sell in the same market you buy in. The best time to upgrade is when your personal circumstances demand it (growing family, job relocation, lifestyle change) rather than trying to time the market. The gap between your current property and your target property is what matters, and in a rising market that gap often widens.

Time in the Market vs Timing the Market

The old saying "time in the market beats timing the market" has strong empirical support in Australian property. CoreLogic data shows that national dwelling values have increased in approximately 85% of calendar years since 1993. Buyers who purchased at the "wrong" time (just before a correction) and held for 10+ years have almost always ended up in positive equity.

The cost of waiting is often underestimated. If you wait two years for a 10% correction that never comes, and prices rise 5% per year instead, you are now paying 10% more for the same property. Even if a correction does come, it may only bring prices back to where they were when you first considered buying.

This does not mean you should buy recklessly. It means that if your financial position is sound, your target suburb has strong fundamentals, and you have done your research, waiting for the "perfect" time often costs more than it saves.

Note: This article provides general commentary on market conditions and is not personal financial advice. Property is a significant financial commitment. Always conduct your own research and consider seeking advice from a qualified financial adviser or mortgage broker before making a purchase decision.