Cold feet and cooling prices: Australia’s property market is transforming – and first home buyers aren’t biting

Since late May, fewer than half of homes listed for auction each week have successfully sold. About 40% of listed homes are being sold before auction. Photograph: Lisa Maree Williams/Getty Images View image in fullscreen Since late May, fewer than half of homes listed for auction each week have successfully sold. About 40% of listed homes are being sold before auction. Photograph: Lisa Maree Williams/Getty Images Cold feet and cooling prices: Australia’s property market is transforming – and first home buyers aren’t biting Exclusive: Data shows buyers are not rushing to get into the market, despite lower prices and less competition Get our breaking news email , free app or daily news podcast First home buyers are starting to step back and investor demand is slumping in all areas except new property, as Australia’s housing market enters a downturn. Research shows the market is transforming, nearly two months on from a third consecutive interest rate rise and sweeping tax reforms. Here’s what the data is telling us. Buyers getting cold feet First home buyers are getting cold feet in the face of rising interest rates, ending a boom in demand backed by the government’s 5% deposit scheme. They had accounted for more than 10,000 new loans a month from October, when the scheme expanded, until March, the Australian Bureau of Statistics has reported. Credit agency Equifax reported home loan applications in May were 10.9% lower than May 2025 – while first-timer applications were down 13.4%. For those shedding a tear over house prices falling, these numbers may change your mind | Greg Jericho Read more Loan Market saw first home loan applications fall 20% in June compared to the same month in 2025. Another way of tracking entry-level activity is by comparing price growth in homes eligible for the popular 5% deposit scheme with those that aren’t. Homes are eligible if they are priced below $1.5m in NSW cities, $1m for south-east Queensland, $950,000 for Melbourne and Geelong, $850,000 for Perth, $900,000 for Adelaide and $700,000 for Hobart, with varying levels in the regions. Sign up for the Breaking News Australia email Data from the property insights platform Cotality, pulled exclusively for Guardian Australia, shows property prices outside the scheme’s price caps began falling in April. Properties below the caps rose faster in price, for longer, but began to fall in June. Chart showing slower decline of first home buyer property prices Lauren Jones, a Brisbane buyers’ agent, said she had seen only some first home buyers out and about, despite the quieter market working in their favour. “This is what first-time buyers have been waiting for … and they’re just not taking the opportunity,” Jones said. The Reserve Bank’s interest rate rises have pushed the average new loan rate above 6% annually, likely forcing some first home buyers to give up. 29:25 Newsroom edition: House prices in Australia are falling – will it hurt Labor? – Full Story podcast Jones said