Prices Are Falling. Is That a Reason to Wait, or a Reason to Look?

The short version: Perth prices have started to slip, and several buyers I've spoken to recently have decided to wait. History shows the bottom of every Australian downturn arrived without warning, while sentiment was still poor. Whether you should buy now depends far less on the direction of the next index than on six questions only you can answer.

Over the past few weeks I've spoken with a number of first home buyers who have reached the same conclusion: with prices starting to slip, now isn't the time to buy. I understand the instinct. Nobody wants to sign a contract and watch the value fall the following month.

But "wait for the bottom" is a strategy that sounds simple and is very hard to execute. So rather than tell you whether to buy or not, this post lays out what's actually happening, what Australia's previous downturns looked like, and the questions that matter far more than the direction of the next Cotality index.

Where the market sits right now

The headline numbers, as at the start of September 2026:

Measure	Latest reading	What it means for buyers
National home values	−0.9% in August; fifth consecutive monthly fall and the sharpest since late 2022	Sydney, Melbourne and Canberra are leading the falls
Perth values	−0.8% in August; peaked May 2026; median a little above $1 million; still up ~20% over the year	Strongest annual result of any capital, but momentum has turned
Sales activity	Perth transactions down more than 20% on a year ago; open-home attendance roughly halved; listings building	More choice and more negotiating power than in several years
Interest rates	75 basis points of RBA rises; cash rate 4.35%; majors don't expect a cut until mid-2027	Borrowing capacity is lower than it was a year ago
Policy	Federal changes to negative gearing and capital gains tax	Investors have pulled back, easing competition at entry level
Price segments	Upper-quartile values nationally down more than 3% over three months; lower-priced housing holding comparatively firm	The first home buyer segment is the least affected so far

One number worth sitting with: Cotality modelled what a 20% fall from peak would mean in each capital. In Perth, it would take the median back to roughly April 2025. That's how much growth is banked underneath the current price.

What history actually shows

Australia has had four notable downturns in the past two decades. Here's how each played out, and what happened afterwards.

The GFC (2008)

National values fell 6.4% over the 2008 calendar year. The downturn was short. Rate cuts, the First Home Owner Boost and a stable job market drove a rebound through 2009 and 2010. Buyers who waited for the "real" crash largely missed it.

Perth's long slump (2014–2019)

This is the one Perth buyers should study. The median house price peaked in late 2014 as the mining construction boom ended, then fell for roughly five years — down more than 20% by late 2019. Negative equity was widespread and plenty of owners were stuck in homes they couldn't afford to sell. Recovery didn't come from any one event; it came from population growth returning, a housing shortage building, and lending conditions loosening. From the 2019 trough, Perth's median house price more than doubled to reach $1.09 million by early 2026.

The lesson cuts both ways. Downturns can last far longer than people expect — five years is a long time to carry a loan on a falling asset. But the buyers who purchased in 2018 and 2019, when sentiment was at its lowest and every headline said Perth was in the doldrums, have done better than almost anyone who bought before or since.

The credit squeeze (2017–2019)

National values fell 8.4% over 20 months as APRA and the banks tightened lending. Sydney dropped around 15%. The market bottomed in mid-2019 after rate cuts and the loosening of serviceability rules, then the pandemic-era boom lifted national values 28.9% between September 2020 and May 2022.

The rate shock (2022–2023)

National values fell 8.4% in under nine months — the fastest decline on record. Sydney fell 13%, Brisbane 10%, Melbourne 8.6%. Perth fell less than 1%. National values were back at a new high by late 2023, before the RBA had cut rates once.

The bottom arrived without warning, it was reached while sentiment was still poor, and prices had usually recovered their losses before the "all clear" was obvious.

Since 1991, Australian house prices have never fallen for more than two consecutive calendar years. That doesn't mean it can't happen. It means anyone waiting for a clear signal that the fall is over is, historically, waiting for something that doesn't get sent.

Buying into a falling market — the honest case for and against

What works in your favour

• More listings, fewer competing buyers, and vendors who need to negotiate. You can run proper due diligence, include conditions, and walk away from a bad deal.

• No fear of missing out. In a rising market, buyers routinely overpay because the next open home will cost more. That pressure is gone.

• You're buying a property with a large amount of recent growth already priced in, and possibly some of it coming out.

What works against you

• Timing risk. If Perth values fall a further 5–10% after you settle, your equity shrinks. With a 5% deposit, that can mean owing more than the home is worth for a period. It's only a problem if you need to sell or refinance during that window — but it's a real problem if you do.

• Valuation risk. Lenders' valuations lag the market. In a falling market a valuation can come in below your contract price, which changes your deposit requirement and possibly your LMI.

• Borrowing capacity is lower right now because rates are higher. You're buying a cheaper house with a more expensive loan.

• Nobody can tell you where the bottom is. Anyone who says they can is guessing.

Buying into a rising market — the same test

What works in your favour

• Momentum. Equity builds quickly, which gives you options sooner: refinancing, upgrading, or investing.

• Lending is usually easier because valuations are running ahead of contracts, not behind them.

What works against you

• You're competing with everyone else. Auctions, multiple offers, no conditions, and a strong pull to stretch beyond what you're comfortable repaying.

• Prices can outrun your deposit. Perth buyers saw this through 2024 and 2025: every month of saving was undone by the month's price growth.

• Borrowing capacity gets stretched to its limit precisely when you can least afford a surprise.

The questions that actually decide it

The direction of the market next quarter is the least useful question you can ask, because you can't answer it. These are the ones you can.

1. Can I comfortably afford the repayments at today's rates, plus a buffer?

Not at the rate you hope for after the next cut. At the rate on the table now, with room for one or two more rises. If the answer is yes, price movements are a background issue. If the answer is no, the market direction doesn't matter either — you're not ready, and that's fine.

2. How long am I planning to hold?

Every Australian downturn in the past 30 years has been fully recovered within a few years, and most within two. If you'll be in the home for five to ten years, the entry price matters less than people assume. If there's a real chance you'll need to sell within two or three years, a falling market is a genuine risk.

3. Is my income stable?

Downturns hurt the people who have to sell into them. Job security is a bigger factor in whether a purchase works out than the purchase price.

4. What does waiting actually cost me?

Perth rents rose 8.1% over the past year. If you're renting while you wait, that's money out the door and a rental market that isn't getting cheaper. Add the possibility that lending rules tighten further, or that the government scheme you're relying on changes its caps. Waiting is not free; it just has a less visible price tag.

5. What happens to my position if the market falls another 10% after I buy?

Work this out on paper. If the answer is "I'm uncomfortable but I keep paying the loan and I'm fine in five years," you can absorb it. If the answer is "I'd be in serious trouble," don't buy yet — or buy with a larger deposit.

6. Am I buying a home or an investment?

If it's the home you'll live in for a decade, you're buying shelter and stability, and the resale price on any given day is mostly noise. If it's an investment, timing and yield matter far more, and the case for patience in a falling market is stronger.

Where that leaves you

There's no version of this post that ends with "so buy now" or "so wait." The buyers I've seen do best across multiple cycles share one trait: they bought when their finances were ready, they bought something they could hold through a downturn, and they ignored the noise in between.

If the numbers work today and you're planning to stay put, a softening market with more choice and less competition is not a bad environment to buy in. If the numbers don't work, or you can't be sure you'll still be in the home in three years, the smartest move is to keep saving and use this time to get your position strong — because when the market turns, it tends to turn quickly.

Want to know what your numbers look like?

The decision should come from your own position, not from the headline. A 20-minute conversation will tell you whether you're ready now, or what needs to change before you are.

Book a chat with Ian

This article contains general information only and does not take into account your personal objectives, financial situation or needs. Market data sourced from Cotality (formerly CoreLogic), REIWA, Domain and ABC News reporting as at September 2026.

Ian Freeman — Finance 365 Credit Representative Number 439731 of Australian Credit Licence 384704.