The Balance of Power Is Shifting

**Market Intelligence Monday — 17 August 2026** Australia''s property market is becoming more favourable for buyers — but that doesn''t mean the underlying housing shortage has disappeared. For much of the past few years, buyers have been operating in an environment characterised by limited stock, rising prices and intense competition. That picture is beginning to change. National dwelling values fell 0.7% in July according to Cotality, while the Reserve Bank noted in its [August Statement on Monetary Policy](https://www.rba.gov.au/publications/smp/2026/aug/overview.html) that housing conditions have weakened more than it expected only a few months ago. Perhaps more importantly for buyers, the number of properties available for sale has increased substantially. [SQM Research](https://sqmresearch.com.au/uploads/04-08-26-Total-Property-Listings-July-2026-2037.pdf) reported that national residential listings rose 12.4% during July and are now 22.8% higher than a year ago. Older listings are also accumulating, suggesting properties are taking longer to sell. In Melbourne, listings are now more than 40% higher than this time last year, and Sydney stock has increased by around 28%. That changes the negotiating environment. ## More choice changes buyer behaviour A year ago, buyers in many markets had little room for hesitation. If a suitable property appeared, there was often another buyer prepared to move quickly. Increasing stock gives purchasers something they haven''t consistently enjoyed in recent years: alternatives. When buyers have alternatives, they become less dependent on any individual transaction. They can negotiate more firmly, walk away from unrealistic vendor expectations and be more selective about defects, location and price. That doesn''t necessarily mean prices are about to fall dramatically. But it does mean the balance of power between buyers and sellers is becoming more even. ## Yet the housing shortage hasn''t gone away The interesting part is that the rental and construction markets are telling a very different story. Australia''s national rental vacancy rate remains around 1.3% according to [SQM Research](https://sqmresearch.com.au/uploads/14-07-26-National-Vacancy-Rates-June-2026-2036.pdf), with vacancies considerably lower in several capital cities. Brisbane, Perth, Adelaide and Hobart all continue to record particularly tight rental conditions, and advertised rents remain materially higher than a year ago. Meanwhile, the latest [building approval figures](https://www.abs.gov.au/statistics/industry/building-and-construction/building-approvals-australia/latest-release) showed an improvement in the pipeline of proposed new homes — but approvals are not the same thing as completed dwellings. Australia continues to build well below the pace required to meet the Federal Government''s housing target, with labour shortages, financing costs and elevated construction costs limiting the industry''s ability to convert approvals into finished homes. This creates an unusual combination: **the market for buying property is becoming less competitive, while the market for occupying property remains undersupplied.** ## What does this mean for investors? A softer property market should not automatically be interpreted as a weak investment market. In some locations, improving buyer negotiating power may coincide with extremely tight rental conditions and limited new housing supply. That can create opportunity — but it also makes market selection increasingly important. The performance gap between different cities, suburbs and individual properties is likely to become more noticeable as the national market loses momentum. Simply buying because a property has become cheaper is not a strategy. We continue to favour locations where there is a credible combination of population and employment growth, constrained housing supply, strong rental demand and an established owner-occupier market. Equally importantly, greater choice means buyers can afford to reject properties that don''t meet those criteria. ## The takeaway Conditions are changing, but the current market is more nuanced than the headline price figures suggest. The cumulative effect of earlier rate rises and stretched affordability is clearly weighing on purchasing activity, and more stock is becoming available. For buyers, that is welcome. At the same time, rental vacancies remain exceptionally tight and the structural challenge of producing enough new housing remains unresolved. **The Firm Foundations view:** the next phase of the market is less about chasing growth and more about using increased negotiating power to acquire the right property, in the right market, at the right price. **Sources** - [Reserve Bank of Australia — Statement on Monetary Policy, August 2026](https://www.rba.gov.au/publications/smp/2026/aug/overview.html) - [SQM Research — Residential Property Listings, July 2026](https://sqmresearch.com.au/uploads/04-08-26-Total-Property-Listings-July-2026-2037.pdf) - [SQM Research — Residential Vacancy Rates, June 2026](https://sqmresearch.com.au/uploads/14-07-26-National-Vacancy-Rates-June-2026-2036.pdf) - [Australian Bureau of Statistics — Building Approvals](https://www.abs.gov.au/statistics/industry/building-and-construction/building-approvals-australia/latest-release)