How To Know If Buying Makes Sense In A Falling Market

Australian property prices are still falling. But that doesn’t automatically mean waiting will leave you better off.

Cotality’s national Home Value Index fell 1.1% in September 2026, marking the sixth consecutive month of falling values. National dwelling values are now 5.2% below their March 2026 peak, and 97% of capital-city suburbs recorded a fall in value over the three months to the end of September.

At the same time, borrowing has become more expensive. On 29 September, the Reserve Bank of Australia increased the cash rate by 0.25 percentage points to 4.60% and said it remained prepared to increase rates further if needed.

Australian Property Market Snapshot: October 2026

Sources: RBA and Cotality

It’s also important not to treat Australia as one property market.

Sydney values are now 8.6% below their February peak, while Brisbane recorded the largest monthly capital-city decline in September at 1.5%. Regional markets have been more resilient overall: regional dwelling values were still 5.6% higher than a year earlier, compared with a 1.8% annual decline across the combined capitals.

What matters to you is what is happening to the type of property you’re considering, in the suburb you’re considering buying it in.

That creates an important trade-off for buyers:

The property you want may be getting cheaper while the amount you can comfortably borrow is also falling.

So the most useful question isn’t necessarily, “Should I wait for house prices to fall further?”

It is, “Would waiting actually put me in a better buying position?”

Here are five questions worth answering before you decide.

1. Would The Mortgage Still Be Comfortable If Rates Rise Again?

Start with your repayment, not a property price forecast.

Suppose you’re buying an $800,000 property, contributing $80,000 and borrowing $720,000 over 30 years.

Here is what the repayments could look like at different illustrative interest rates:

Interest rate	Approx. monthly repayment
6.50%	$4,551
6.75%	$4,670
7.00%	$4,790
7.25%	$4,912

Going from 6.50% to 7.00% would add about $239 a month to the repayment.

So instead of asking only whether you can afford the mortgage today, ask,“Could I absorb another $200-$300 a month without relying on overtime, dipping into emergency savings or cutting essential spending?”

If not, the bigger risk may not be whether the property falls another 2% or 3%. The proposed mortgage might already be too close to your limit.

You can use our home loan repayment calculator to test different interest rates before deciding what repayment feels comfortable.

Remember: The maximum amount a lender will approve and the amount you are comfortable repaying are not necessarily the same.

Already Have Pre-Approval?

Don’t assume your maximum buying budget is unchanged just because you already have pre-approval.

An RBA cash rate increase does not automatically cancel an existing pre-approval. But lenders can change their interest rates, assessment assumptions and lending policies, while changes in your own circumstances can also affect borrowing capacity.

If rates have moved since you were assessed, it is worth checking your position before increasing an offer or entering into an unconditional contract.

2. Does Falling Property Prices Mean Housing Is Becoming More Affordable?

Not necessarily.

This is one of the most important things to understand in the current market.

National dwelling values are now 5.2% below their March peak. But Cotality estimates that the cumulative effect of recent rate rises since February has reduced borrowing capacity for a median-income household by almost $90,000 – around 9%.

Those figures measure different things, so they shouldn’t be directly compared as if one cancels out the other.

But they illustrate an important point:

Falling house prices and improving affordability are not the same thing.

Imagine you see an $800,000 property and decide: “I’ll wait until it falls to $760,000.”

If mortgage rates rise while you’re waiting, however, the amount you can borrow while keeping the same repayment can also fall.

For example, if you wanted to keep repayments at approximately $4,551 a month, this is roughly how the numbers could change:

Mortgage rate	Approx. purchase price
6.50%	$800,000
6.75%	$781,650
7.00%	$764,000
7.25%	$747,100

Illustrative only. Assumes an $80,000 cash contribution, 30-year principal-and-interest loan and excludes stamp duty and other purchasing costs.

So a $30,000 fall in a property’s price doesn’t necessarily mean you have gained $30,000 of buying power.

That’s why there are two numbers worth watching:

• What is happening to the price of the property?
• What is happening to your borrowing capacity and repayments?

Instead of asking, “How much further could prices fall?”

Ask, “How far would this property need to fall before waiting actually improves my position?”

3. Are You Getting A Genuine Discount?

A falling market may give buyers more room to negotiate.

There is evidence that conditions have become more favourable to buyers in many parts of the market.

Cotality estimates that the number of homes sold nationally over the three months to September was 19.1% lower than a year earlier. Across the combined capitals, total advertised stock was 23.1% higher, while the median selling time had increased from 23 days a year ago to 39 days.

That can mean more choice, longer selling periods and less pressure to rush into a decision.

But don’t confuse a discount from the asking price with getting a bargain.

Imagine:

• Original asking price: $900,000
• Reduced asking price: $880,000
• Your negotiated offer: $850,000

It looks like you have negotiated $50,000 off.

But if similar properties nearby have recently been selling for about $840,000, the vendor’s original asking price was never the right benchmark.

Before deciding what a property is worth to you, check:

• Recent comparable sales
• How long the property has been on the market
• Any previous changes to the asking price
• Similar properties currently for sale
• Land size and property condition
• Location within the suburb
• Renovations, layout and other meaningful differences.

Then decide your walk-away price before negotiating.

In a softer market, one of the biggest advantages a buyer can have is simply being prepared to walk away when the numbers don’t stack up.

What If The Bank Values The Property Below Your Offer?

There is another number buyers sometimes overlook: the lender’s valuation.

Suppose you agree to pay $800,000 for a property but the lender’s valuation comes back at $760,000.

Depending on the lender and circumstances, it may calculate the loan-to-value ratio (LVR) using the lower valuation.

That could affect:

• How much cash you need to contribute
• Your LVR
• Whether Lenders Mortgage Insurance (LMI) applies
• Which lenders or loan products are available to you
• Whether the purchase still works with the funds you have available.

That’s why getting money off the asking price isn’t enough on its own.

The important question is:

“Is the price I’m paying supported by the property itself?”

4. Are You Using Lower Prices To Borrow More Or Borrow Better?

There’s another benefit to a falling market that’s easy to overlook.

You don’t have to use every dollar you negotiate off the property price to increase your buying budget.

Suppose you had planned to:

• Pay $800,000
• Contribute $80,000
• Borrow $720,000

If you can instead buy the property for $770,000 and keep the same $80,000 contribution, your loan falls to around $690,000.

At an illustrative interest rate of 6.50% over 30 years, borrowing $30,000 less reduces the repayment by roughly $190 a month.

But the benefit doesn’t have to stop at the monthly repayment.

A lower purchase price could allow you to:

• Borrow less
• Keep more cash available after settlement
• Reduce your LVR
• Potentially reduce or avoid LMI, depending on your circumstances
• Leave more room for moving expenses, repairs or renovations
• Give yourself more protection against future interest-rate increases.

There’s a temptation when prices fall to think:“Great, now I can afford a better property.”

Sometimes that’s reasonable.

But don’t automatically turn every dollar of price reduction into a larger purchase.

Ask, “Does borrowing more materially improve the property I’m buying, or am I simply stretching because the bank says I can?”

Sometimes the best use of a falling market is not buying more house.

It’s buying the house you already wanted with a smaller mortgage.

5. What Are You Actually Waiting For?

Waiting can be sensible.

But if you’re going to wait, give yourself a measurable reason.

Waiting For House Prices To Fall Further?

Set a price at which you would genuinely be willing to buy.

Don’t simply say: “I’ll wait until the market drops more.”

Would you buy if the property fell from $800,000 to $780,000? What about $760,000?

And if your borrowing capacity fell at the same time, would the lower price actually make the purchase easier?

Having a number helps stop waiting from becoming an indefinite strategy.

Waiting For Interest Rates To Fall?

The September RBA decision is a reminder that interest rates won’t necessarily move according to a buyer’s preferred timeline.

The RBA increased the cash rate to 4.60% on 29 September and said it could increase it further if required to bring inflation sustainably back towards target.

Instead of trying to predict the exact next RBA move, calculate what different scenarios would mean for you.

For example:

• What would another 0.25 percentage-point increase do to your repayment?
• How would a 0.50 percentage-point reduction change it?
• How much would you be comfortable borrowing at either rate?
• Would a change in rates alter the type of property you could buy?

And remember that lower rates can work in two directions.

They could improve your borrowing position, but if they also improve borrowing capacity and confidence across the wider market, you may face more competition from other buyers.

Waiting Until The Property Market Feels Safer?

Define what “safer” actually means.

Perhaps you want:

• A larger deposit
• More cash remaining after settlement
• A lower loan amount
• A more comfortable monthly repayment
• More certainty around your income
• A particular property price.

Those are measurable goals.

“I’ll wait and see what happens” isn’t really a strategy unless you know what you’re waiting to see.

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So, Should You Buy While Property Prices Are Falling?

There is no single answer that applies to every buyer.

Buying during a falling market may be more manageable when:

• The repayments remain comfortable if rates move higher
• The price is supported by recent comparable sales
• You have sufficient funds left after settlement
• You’re not relying on the maximum amount a lender will give you
• You expect to hold the property for several years
• A short-term decline in the property’s value wouldn’t force you to sell or refinance.

Waiting may be worth considering when:

• You’re already borrowing at the edge of what you can afford
• A small increase in repayments would put significant pressure on your budget
• Buying would consume nearly all of your available cash
• Your borrowing position is likely to materially improve in the near future
• The purchase only works financially if property values recover quickly.

The market could fall further.

Interest rates could also move again.

Neither is something you can predict precisely.

A better stress test is: If this property fell another 5%, or my repayment increased by another 0.25-0.50 percentage points, would I still be comfortable owning it?

If the answer is yes, short-term market movements may matter less than whether you’re buying the right property, at the right price, with a mortgage you can comfortably hold.

If the answer is no, falling property prices alone don’t necessarily make it a good buying opportunity.

You don’t have to correctly predict the bottom of the property market.

You need to know whether this property, at this price, with this mortgage still works if conditions move against you for a while.

Know Your Numbers Before You Make An Offer

A falling market can create opportunities for buyers, but the cheapest property isn’t necessarily the best opportunity.

Before making an offer, it helps to know:

• How much you could realistically borrow
• What your repayments could look like at different interest rates
• How much cash you’ll need for the purchase
• What LVR you are likely to have
• How much money you’ll have left after settlement
• Whether your position changes if the lender values the property below your offer.

Home Loan Experts can help you understand how different property prices, loan amounts and lender options may affect your position before you commit to a purchase.

Please call us on 1300 889 743 or enquire online and one of our commercial mortgage brokers will get back to you with some options.

This information is general in nature and doesn’t take into account your objectives, financial situation or needs. Calculations are illustrative only. Property values, interest rates and lending policies can change. Consider your circumstances and seek appropriate professional advice before making a property or financial decision.