Why Waiting for Prices to Fall Can Backfire

Australian property prices have been coming down.

National home prices fell for the sixth consecutive month in September, according to realestate.com.au. Prices were 3.3% below their March 2026 peak, while annual growth had slowed to just 0.1%.

That seems like good news for buyers, but at the same time, borrowing has become more expensive.

The Reserve Bank has raised the cash rate four times this year, taking it to 4.60%. So buyers are getting some relief from lower prices while facing more expensive finance.

The mortgage can wipe out the saving

For example, say you are looking at a $700,000 property with a $560,000 loan.

If the property falls by 5%, the price drops to $665,000.

That is a $35,000 reduction.

But if interest rates rise enough to increase your mortgage repayments by several hundred dollars a month, you are paying more to carry the loan every month.

The exact result depends on the loan size, interest rate and term, so there is no single number that applies to every buyer.

The point is that you cannot look at the $35,000 price reduction without looking at the cost of the mortgage attached to it.

Affordability can get worse while prices fall

This is what people often miss when they focus only on the property price. Housing affordability has already deteriorated to a record low in 2026, according to realestate.com.au.

A typical-income household could afford just 12% of homes sold nationally, the lowest result in the history of its affordability index.

Higher mortgage rates reduced borrowing capacity enough to more than offset the benefit from softer property prices and income growth.

So a buyer can be looking at cheaper houses and still find that buying one is harder.

Waiting also comes with a cost

There is another part of waiting that gets overlooked. You still need somewhere to live.

If you are renting while you wait, you are continuing to pay rent while hoping the property you eventually want becomes cheaper.

If prices fall enough to cover that rent, waiting has worked financially. If they do not, you have spent money waiting and still have to buy later.

The same applies to someone who already owns property and is waiting to upgrade. The value of their current home can fall alongside the property they want to buy.

That can change the amount of equity they have available and the price difference between the two properties.

You cannot know where the bottom is

Nobody knows the exact lowest price a property will reach. You can wait for another 5% fall and get it.

You can also wait and find that the property you actually wanted has already been bought by somebody else.

A broad market statistic does not tell you what will happen to one specific house in one specific suburb. Some properties can fall more than the market.

Others can hold their value because there are still plenty of buyers who want that particular type of property.

Lower prices can bring more buyers back

There is another problem with waiting for a large fall. Once prices become cheaper, some buyers who were previously priced out can come back into the market.

Investors may also return if rental yields improve enough.

That can create more competition for the properties that are actually worth buying.

You could spend months waiting for the market to fall, only to find that when the price reaches a level you like, other buyers are ready to compete with you.

Higher rates are already changing what buyers can afford

The effect is not just about whether someone can buy a property. It can change what type of property they can buy.

A buyer who previously had enough borrowing capacity for a house in a particular suburb might now have to look at a cheaper suburb, a smaller house or a different property type.

The latest realestate.com.au data shows this happening across the market. National house prices fell more than unit prices in September, while unit prices remained relatively stronger. Lower borrowing capacity is changing what some buyers can afford.

So waiting for a cheaper house does not mean you will get the same house for less. You could end up having to compromise on the property itself.

What I would do if I were buying

I would not try to guess the bottom of the market.

I would work out what I can comfortably afford now, then look for a property that makes sense at that price.

If prices fall further after I buy, I accept that can happen. If prices rise again, I am already in the property.

The important thing is that I would not buy a property simply because it has fallen from a previous high.

A 10% price fall does not make a bad property good. I still want the location, land, property and demand to be practical.

What I would focus on

I would focus less on predicting the next move in the market and more on the actual property.

• Is it in an area where people genuinely want to live?
• Is there strong rental demand if it is an investment?
• Is the price reasonable compared with similar properties?
• Can I afford the mortgage without relying on rates falling?
• Would I still be happy owning it if prices stayed flat for several years?

Final word

Waiting for prices to fall can work if prices fall far enough and borrowing costs stay under control.

But there is no guarantee those two things will move together.

We are already seeing property prices fall while higher interest rates are making borrowing harder and housing affordability worse.

So I would not make the decision based on a target like only buying when the prices fall another 10%. 

I would buy when I find a good property at a price I can afford, with numbers that work at today’s interest rates.

Trying to predict the bottom is much harder than finding a property that makes sense in the first place.