Weekly Market Brief: Falling Prices Won’t Fix Australia’s Housing Problem

Australia’s property market is getting cheaper.

On the surface, that sounds like good news for housing affordability. The reality is more complicated.

NAB is forecasting a peak-to-trough decline of around 7% across Australia’s combined capital-city dwelling market, including a fall of approximately 5% during 2026.

Canberra’s auction market is already reflecting those softer conditions. Domain recorded a clearance rate of just 38% for the week ending 5 September. Of 49 scheduled auctions, 45 results were reported and only 17 properties sold. Fourteen were withdrawn and another 14 passed in. At the same point last year, Canberra’s clearance rate was 65%.

Yet evidence presented to the Senate inquiry into intergenerational housing inequity last week highlighted an important distinction.

Lower property prices can improve conditions for some buyers. They do not create more homes.

NAB chief economist Sally Auld argued that meaningful improvements in housing affordability require sustained increases in supply over many years.

That is where the bigger challenge sits.

Canberra buyers have more leverage

A 38% auction clearance rate represents a significant shift in negotiating conditions.

Buyers have more properties to compare, less fear of missing out and greater scope to negotiate where the available evidence does not support a seller’s expectations.

For Canberra buyers, that can create genuine opportunities.

But buyer-friendly conditions and housing affordability are not the same thing.

A household might negotiate $40,000 from a purchase price and still find the resulting mortgage difficult to service. Interest rates, borrowing capacity, household income, deposits and living costs all influence affordability.

The sale price is only one part of the equation.

A falling market cannot create more homes

This is the tension facing housing policymakers.

Lower prices can make existing properties more accessible to some buyers. But if falling prices also reduce the financial viability of new developments, the supply response can weaken.

Developers need expected sale prices to justify purchasing land, securing finance and committing significant capital to construction. At the same time, they are dealing with higher labour, material and borrowing costs.

NAB told the Senate inquiry that developers are effectively being squeezed from both directions, with construction costs increasing while the prices they may ultimately receive for completed properties decline.

For some projects, the numbers simply stop working.

An approval is not a home.

The Bathla situation highlights delivery risk

That issue became particularly visible this week, with more than 200 employees at major property developer Bathla Group stood down after the business entered voluntary administration carrying around $3.4 billion in debt.

Administrators are attempting to secure funding to complete approximately 2,500 homes already under construction across the group’s development pipeline.

The circumstances surrounding one developer should not be treated as evidence that the broader Australian development sector faces the same outcome. Independent property economist Cameron Kusher noted that financial problems of this scale generally do not develop overnight.

But the broader environment remains relevant.

Higher interest rates increase development finance costs. Falling property prices can reduce expected revenue. Weaker buyer demand can make presales harder to secure.

If enough projects become financially unviable, Australia’s housing supply problem becomes harder to solve.

Australia has an approvals problem and a completions problem

Planning remains an important part of Australia’s housing debate.

Restrictive zoning, lengthy approval processes and infrastructure constraints can all limit new supply.

But there is another issue. Some projects receive approval and never reach construction. Others can be delayed for years as building costs, financing conditions or expected sale prices change.

That distinction is particularly relevant in Canberra.

The ACT’s missing middle reforms have expanded development potential across RZ1 and RZ2 land, providing pathways for more duplexes, triplexes, terraces, townhouses and low-rise apartments.

That creates potential supply.

Whether that potential becomes completed housing depends on feasibility.

Canberra’s missing middle faces its real test

Planning reform was the first step. The next test is whether projects can actually be delivered.

Can a homeowner redevelop a suitable block and make the numbers work? Can a smaller developer secure finance? Can builders deliver at a sufficiently predictable cost? Can the completed homes then be sold at prices buyers are prepared and able to pay?

Those questions matter more than theoretical dwelling capacity.

Allowing another 10,000 homes to be built creates opportunity. Creating the conditions where those homes can actually be financed, constructed and completed creates supply.

There is an important difference.

Lower prices create opportunities for current buyers

None of this diminishes the opportunities available to Canberra buyers today.

A 38% clearance rate gives purchasers greater negotiating room than they had in stronger seller markets. Properties that pass in can move into post-auction negotiations, sellers with genuine reasons to move may become more flexible and buyers have more time to compare competing stock.

That is a healthier environment for considered decision-making.

But buyers should not assume every seller is under pressure or every property will become cheaper.

Well-presented homes in tightly held locations can still attract multiple buyers. A softer city-wide market does not remove scarcity from an individual street, suburb or property type.

Understanding the individual property remains more useful than relying on the headline market alone.

Sellers need to respond to the evidence

For Canberra sellers, a 38% clearance rate leaves little room for complacency.

Seventeen reported sales from 45 auction results is not a market where ambitious pricing can automatically rely on competition to close the gap.

Early enquiry matters. Inspection numbers matter. Repeat interest, comparable sales, competing listings, buyer feedback and offers all matter.

If several qualified buyers independently reach a similar conclusion about value, the campaign is providing useful information.

Waiting for conditions to change is not always a strategy. In some cases, it simply increases days on market while buyers gain more negotiating leverage.

Hayman Partners’ sales approach similarly emphasises transparent market evidence, realistic pricing and adjusting campaign strategy to buyer feedback and current conditions.

Presentation matters more when buyers have choice

A buyer-friendly market also increases competition between sellers.

When purchasers have more options, each property needs to earn their attention.

Professional photography, considered styling, video, accurate floorplans and clear campaign copy help buyers understand why one property deserves consideration over another.

The objective is not simply to make a home look attractive. It is to communicate its value clearly against the competing properties available at the same time.

Strong presentation cannot permanently overcome a pricing problem. Poor presentation, however, can undermine an otherwise saleable property.

This aligns with Hayman Partners’ broader approach of tailoring property campaigns to the individual home and using local market knowledge to position listings effectively.

Falling prices can complicate future supply

This is one of the more difficult aspects of the current downturn.

Australia needs more homes, but some of the conditions pushing established property prices lower can also make those additional homes harder to deliver.

If construction costs remain elevated while expected selling prices decline, fewer developments may pass feasibility tests. If fewer projects proceed, housing supply falls further behind demand.

When borrowing conditions eventually improve and buyers return, the market can find itself facing the same underlying problem, insufficient housing.

That is how a short-term property correction can exist alongside a long-term housing shortage.

Completed homes are what matter

Housing policy is often measured through land releases, development approvals, dwelling targets and rezoning announcements.

All are useful indicators, but none represents the final outcome.

A rezoned block does not house anyone. An approved apartment development does not add supply until it is built. A project that becomes financially unviable before completion does not solve the shortage.

For Canberra, the longer-term measure of recent planning reform should therefore be straightforward.

How many additional, well-designed and financially viable homes are actually completed?

Planning capacity matters. Delivery matters more.

Final thought

Canberra buyers currently have more leverage. The latest auction clearance rate is just 38%, while national property prices are forecast to fall further.

Those conditions can create genuine opportunities for purchasers, but they should not be confused with a long-term solution to housing affordability.

Australia’s larger challenge remains delivering enough homes.

That requires planning pathways, infrastructure, skilled labour, available finance and projects that remain commercially viable from approval through to completion.

For buyers, the current market provides greater choice and negotiating power. For sellers, it demands realistic positioning and close attention to market feedback.

For housing policy, the benchmark needs to be higher.

The question is no longer simply how many homes can be built.

It is how many actually are.