It’s one of the apparent contradictions of the 2026 property market: auction clearance rates have fallen to their lowest level since the early pandemic, buyer sentiment has cooled, and forecasters have downgraded their outlooks, yet house prices haven’t collapsed. National values are drifting sideways, not crashing. Here’s why the market is proving more resilient than the gloomy headlines might suggest.
The Cooling Is Real
First, the slowdown is genuine. The combined capital city auction clearance rate recently fell to 47.4 percent, its lowest since April 2020, and clearance rates have been tracking below 60 percent for months. Commonwealth Bank has downgraded its 2026 forecast to flat, from earlier predictions of solid growth, citing the three RBA rate rises and the Budget’s tax changes. Homes are taking longer to sell, and investor activity has pulled back.
Why Prices Aren’t Falling Sharply
Despite all that, prices are holding up, and the reasons come down to some powerful underlying forces.
The first is supply, or the lack of it. Australia continues to build far fewer homes than it needs, with unit approvals down sharply from their peak and construction constrained by high costs and labour shortages. When there aren’t enough homes to go around, prices have a floor under them even when demand softens.
The second is the rental market. With vacancy rates near record lows at around 1.5 percent and rents up 5.9 percent over the year, the cost of renting keeps climbing, which keeps ownership attractive for those who can manage it and supports investor interest despite the tax changes.
The third is first home buyer demand. Government schemes like the expanded First Home Guarantee continue to bring buyers into the market, particularly at the more affordable end, providing a steady source of demand that helps underpin prices in those segments.
A Two-Speed Market
It’s also not a single market. While Sydney and Melbourne have softened most, recording small declines, cities like Brisbane, Adelaide, and Perth have held firmer, supported by tighter supply and stronger interstate migration. Owner-occupiers, rather than investors, are increasingly the dominant force, which tends to make the market more stable and less speculative.
What It Means for Buyers
For buyers, the current market offers something that’s been rare in recent years: a little breathing room. More listings, less competition, longer decision times, and more room to negotiate all favour the prepared buyer, provided their borrowing capacity holds up under the higher rate environment. The flip side is that the structural support under prices means waiting for a major crash is unlikely to pay off.
Most economists, including those at CBA, expect the market to stabilise and begin recovering in 2027 as interest rates potentially ease. For now, it’s a market defined by caution rather than collapse.
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