Article | Intelligent Investment
Business Insights | Australia's Residential Market Rebalances as Buyers Gain Leverage
Australia's residential market is entering a more balanced phase as softer demand, changing investor behaviour and tax reforms reshape conditions across mainstream and prestige housing markets.
October 6, 2026
Australia's Residential Market Rebalances
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After several years of intense competition, rapid price growth and limited supply, Australia’s residential market is entering a new phase.
CBRE’s latest Residential Valuer Insights Q3 2026 and Prestige Residential Valuer Insights Q3 2026 surveys point to a market that is rebalancing in favour of buyers. Across both mainstream and prestige segments, Valuers are reporting softer demand, longer selling periods, greater price sensitivity and rising listing volumes.
While activity remains across the country, buyers are becoming more selective. Quality assets continue to attract interest, but purchasers are taking more time, negotiating harder and focusing on value rather than competing at any cost.
Valuers now identify these tax reforms as the biggest factor expected to influence residential market performance over the next 12 months, ahead of interest rates and broader affordability concerns. More than 80% of Valuers expect the CGT changes to place downward pressure on prices, with similar sentiment expressed towards Negative Gearing reforms.
Importantly, sentiment has shifted since the Federal Budget announcements. Immediately following the reforms, interest rates remained the dominant concern. Several months later, Valuers are reporting that taxation changes are influencing pricing expectations, investor behaviour and market activity.
Sameer Chopra, Pacific Head of Research at CBRE, said: “These insights are timely and help us to understand more about how market sentiment has changed since May following the changes to CGT and Negative Gearing. We can see these changes are now clearly influencing how prices, development and rents are being assessed.”
The surveys also suggest these reforms may have broader consequences. While many Valuers expect downward pressure on prices, most also anticipate rising rents as investor activity and development feasibility come under greater scrutiny.
First home buyers are now the most active purchaser group nationally, identified by 78% of Valuers as active in their local markets. This is the highest level recorded since the survey began in 2024 and reflects a growing share of market activity as investors retreat.
In contrast, local and interstate investor activity has fallen to its lowest level since 2024, reflecting the combined impacts of taxation reform, borrowing costs and softer expectations for future capital growth.
Kat Hale, National Director of Residential Valuations at CBRE, said: “Across Australia, our Valuers are seeing demand soften. There is still activity in the market, particularly from first home buyers, but demand from investors has slowed, reflecting the changes to CGT and Negative Gearing as well as higher interest rates.”
The prestige market is experiencing a similar shift. Local owner-occupiers and upgraders remain active, but interstate and overseas buyer activity has moderated, contributing to softer overall conditions.
More than half of residential Valuers now describe demand in their local markets as “soft” or “very limited”, marking the first time since the survey began in 2024 that the majority of respondents have reported negative demand conditions.
Prestige markets are seeing the same trend. Half of prestige Valuers now report soft demand, compared with just 20% at the beginning of 2026. New South Wales presents the weakest prestige conditions, while South Australia and Western Australia remain the most resilient.
This softer environment does not mean buyers have disappeared. Rather, the balance of power has shifted. Properties that are well presented, recently renovated or offer unique attributes continue to attract interest, while buyers are showing greater caution towards secondary stock and assets perceived as overpriced.
For the first time in the survey’s history, most residential Valuers expect house and apartment prices to decline over the next 12 months. Almost two-thirds anticipate falls, although most expect any adjustment to be less than 10%.
The prestige market tells a similar story. More than two-thirds of prestige Valuers expect house values to decline, while expectations for apartment and vacant land values have also softened significantly.
Conditions are not uniform across Australia. Adelaide and Perth continue to stand out as the strongest-performing markets, with Valuers maintaining relatively positive expectations for future demand and value growth. Sydney and Melbourne are expected to experience softer conditions.
What is changing is the market dynamic. Higher interest rates, taxation reforms and evolving buyer sentiment are creating a more balanced environment where value, quality and pricing realism matter more.
For investors and homeowners, the momentum-driven conditions of recent years are giving way to a market that rewards careful decision-making and a focus on long-term fundamentals.
With changes to Capital Gains Tax and Negative Gearing continuing to influence buyer behaviour and pricing expectations, understanding market conditions and property value fundamentals will be increasingly important in the year ahead.
CBRE’s latest Residential Valuer Insights Q3 2026 and Prestige Residential Valuer Insights Q3 2026 surveys point to a market that is rebalancing in favour of buyers. Across both mainstream and prestige segments, Valuers are reporting softer demand, longer selling periods, greater price sensitivity and rising listing volumes.
While activity remains across the country, buyers are becoming more selective. Quality assets continue to attract interest, but purchasers are taking more time, negotiating harder and focusing on value rather than competing at any cost.
Tax reforms are reshaping sentiment
One of the clearest themes emerging from the surveys is the growing influence of changes to Capital Gains Tax (CGT) and Negative Gearing.Valuers now identify these tax reforms as the biggest factor expected to influence residential market performance over the next 12 months, ahead of interest rates and broader affordability concerns. More than 80% of Valuers expect the CGT changes to place downward pressure on prices, with similar sentiment expressed towards Negative Gearing reforms.
Importantly, sentiment has shifted since the Federal Budget announcements. Immediately following the reforms, interest rates remained the dominant concern. Several months later, Valuers are reporting that taxation changes are influencing pricing expectations, investor behaviour and market activity.
Sameer Chopra, Pacific Head of Research at CBRE, said: “These insights are timely and help us to understand more about how market sentiment has changed since May following the changes to CGT and Negative Gearing. We can see these changes are now clearly influencing how prices, development and rents are being assessed.”
The surveys also suggest these reforms may have broader consequences. While many Valuers expect downward pressure on prices, most also anticipate rising rents as investor activity and development feasibility come under greater scrutiny.
Investors step back as first home buyers step forward
The make-up of buyers is also changing.First home buyers are now the most active purchaser group nationally, identified by 78% of Valuers as active in their local markets. This is the highest level recorded since the survey began in 2024 and reflects a growing share of market activity as investors retreat.
In contrast, local and interstate investor activity has fallen to its lowest level since 2024, reflecting the combined impacts of taxation reform, borrowing costs and softer expectations for future capital growth.
Kat Hale, National Director of Residential Valuations at CBRE, said: “Across Australia, our Valuers are seeing demand soften. There is still activity in the market, particularly from first home buyers, but demand from investors has slowed, reflecting the changes to CGT and Negative Gearing as well as higher interest rates.”
The prestige market is experiencing a similar shift. Local owner-occupiers and upgraders remain active, but interstate and overseas buyer activity has moderated, contributing to softer overall conditions.
Buyers have more leverage
Demand has softened across much of Australia.More than half of residential Valuers now describe demand in their local markets as “soft” or “very limited”, marking the first time since the survey began in 2024 that the majority of respondents have reported negative demand conditions.
Prestige markets are seeing the same trend. Half of prestige Valuers now report soft demand, compared with just 20% at the beginning of 2026. New South Wales presents the weakest prestige conditions, while South Australia and Western Australia remain the most resilient.
This softer environment does not mean buyers have disappeared. Rather, the balance of power has shifted. Properties that are well presented, recently renovated or offer unique attributes continue to attract interest, while buyers are showing greater caution towards secondary stock and assets perceived as overpriced.
Price expectations turn negative
Perhaps the strongest sign of changing market conditions is the shift in price expectations.For the first time in the survey’s history, most residential Valuers expect house and apartment prices to decline over the next 12 months. Almost two-thirds anticipate falls, although most expect any adjustment to be less than 10%.
The prestige market tells a similar story. More than two-thirds of prestige Valuers expect house values to decline, while expectations for apartment and vacant land values have also softened significantly.
Conditions are not uniform across Australia. Adelaide and Perth continue to stand out as the strongest-performing markets, with Valuers maintaining relatively positive expectations for future demand and value growth. Sydney and Melbourne are expected to experience softer conditions.
Looking ahead
Australia’s residential market is not grinding to a halt. Transactions are continuing and quality property remains in demand.What is changing is the market dynamic. Higher interest rates, taxation reforms and evolving buyer sentiment are creating a more balanced environment where value, quality and pricing realism matter more.
For investors and homeowners, the momentum-driven conditions of recent years are giving way to a market that rewards careful decision-making and a focus on long-term fundamentals.
With changes to Capital Gains Tax and Negative Gearing continuing to influence buyer behaviour and pricing expectations, understanding market conditions and property value fundamentals will be increasingly important in the year ahead.
Contacts
Kat Hale
National Director, Residential Valuations, Australia
Duncan Guthrie
Executive Managing Director, Valuation & Advisory Services, Pacific
Tim Frazer
National Director, Valuations & Advisory Services - Residential QRM, Australia
Lic. 69528
Matt King
Head of Prestige, Residential Valuations, New South Wales
John Beresford
Head of Prestige, Residential Valuations, Victoria
