Affordable housing prices decline faster than luxury

Recent market analysis suggests that the Australian property downturn is impacting segments of the market unevenly. While luxury homes have shown some resilience, more affordable properties have been recording sharper price declines since the federal budget in May.

Economists attribute this trend to a retreat in property investor activity, which has historically focused on more affordable entry-level homes. As investors pull back, the demand for these lower-priced properties has softened significantly compared to the premium end of the market.

The expansion of the federal government's 5% deposit scheme in October 2025 had previously helped support first-home buyer participation in the affordable segment. However, the current economic climate, marked by rising interest rates, has made it increasingly difficult for these buyers to enter the market.

For those looking to buy, the divergence in price movements means that opportunities may be emerging in the affordable sector. However, buyers must balance lower purchase prices against the ongoing costs of holding property in a high-interest-rate environment.