G'day.
The market has quietly handed buyers something it hasn't offered in four years: time, choice, and the ability to say no. Whether you use it well depends entirely on strategy, so let's talk about buying.
First, where things actually stand as of this week:
- Cotality's July data shows the decline has broadened. Sydney is down 1.4% over the quarter, Melbourne 1.2%, and — this is the new part — Brisbane −0.6% and Adelaide −0.2% have now joined them.
- Domain's weekend clearance rate came in at 59% (373 auctions, 221 sold, 65 withdrawn, 87 passed in), against 66% for the same weekend a year ago.
- The cash rate remains 4.35% after the RBA's unanimous hold, and the late-July inflation print landed better than expected — which makes another hike materially less likely than it looked a month ago.
- Herron Todd White's July Month in Review calls it a "potential turning point," with negative gearing and CGT reform named as the primary driver alongside offshore volatility.
- The reforms are now law. Negative gearing is restricted to new builds, with property held before 7:30pm AEST on 12 May 2026 grandfathered; the 50% CGT discount is replaced by cost-based indexation plus a 30% minimum rate, applying only to gains accrued after 1 July 2027.
Two things follow from that list. The market is soft and segmented, and the tax code now prices new and established stock differently. Every strategy below flows from those two facts.
1. Buy where the weakness is, not where the headline is
The falls are not evenly distributed. HTW and the on-the-ground agent commentary agree: it's the upper-end family home market carrying the decline, while affordable stock is still selling under genuine competition.
That's a strategy, not a statistic. If you're buying for yield or for a first investment, the sub-median segment is not where your negotiating power lives — you'll be bidding against a full field. If you're trading up, or buying a higher-value hold, the prestige and upper-middle segments are where vendors have actually moved on price. The discount is real, and it's concentrated in exactly one place.
2. Learn to love a passed-in property
Eighty-seven properties passed in last weekend. Sixty-five were withdrawn. In a 70%+ clearance market those are dead listings; in a 59% market they are your best pipeline.
A passed-in property has three things going for it: a vendor who has now paid for a campaign and has a reserve that failed, an agent with a conditioning conversation to have, and no competing bidder in the room. Set a weekly habit of pulling the pass-in and withdrawn lists in your target suburbs and calling on them at day 7, day 21 and day 45. The day-45 call is the one that works.
3. Price the tax treatment, not just the property
This is the single biggest change to how you should evaluate a purchase this year. An established three-bedder and a comparable new dwelling in the same street are no longer the same asset in after-tax terms — one carries negative gearing deductibility and one doesn't.
That doesn't automatically mean "buy new." New stock carries a developer margin, weaker land content, and often thinner capital growth. It means run both through the numbers before you form a view, because intuition trained on the pre-May rules will lead you wrong. Put your actual figures through the negative gearing calculator for each candidate, and compare after-tax holding cost rather than headline price. If you bought before 12 May 2026, you're grandfathered — that existing portfolio is now scarcer and more valuable than it was in April, which is an argument for holding it rather than churning.
4. Solve for borrowing capacity before you solve for property
Buying strategy in 2026 is really finance strategy wearing a hat. Loan approvals are down across the majors, first-home-buyer applications hardest hit, and investor applications well below pre-Budget levels. APRA's 3% serviceability buffer and 6× DTI cap are unchanged.
Get your maximum position confirmed first, in writing, then shop. The full mechanics — the assessment rate, the HECS thresholds, and the five levers that actually shift the number — are in the borrowing power breakdown. Walking into a soft market with a firm pre-approval is the strongest hand available right now, because roughly half the field can't transact at all.
5. Use long settlements as free optionality
With rates plausibly at their peak and no cut priced in, time is cheap. A 90 or 120-day settlement costs a motivated vendor very little and gives you three things: room to finalise finance under tightened conditions, a buffer if valuations come in short, and exposure to any confidence improvement without paying for it. Vendors in a 59% market will trade terms far more readily than price — so ask for terms.
6. Make conditions your negotiation, not your afterthought
Building and pest, finance, and a subject-to-valuation clause were dropped as standard through 2021–22 because buyers had no choice. They do now. In a market where the buyer pool has thinned this far, reinstating proper conditions costs you almost nothing competitively — and a valuation clause in a market that fell 1.4% last quarter is genuinely protective, not paranoid.
7. Buy on your own timetable, not the RBA's
The temptation right now is to wait for the next decision, then the one after that. Understand what you're waiting for: the RBA has been explicit that it is not in the business of rescuing property prices, and the pause was labelled a pause, not a pivot. If your plan needs a cut to work, the plan is the problem — not the timing.
The more useful frame: buying conditions in the next three to four months are likely to be the best in some time, precisely because sentiment is poor and finance is hard. Those conditions end when confidence returns, not when prices bottom — and confidence turns faster than data does.
Three strategies to avoid this quarter
Averaging down on a weak asset. Buying a second property in the same soft submarket to "average your entry" doubles your exposure to one thesis. In a segmented market, that is the opposite of diversification.
Chasing the incentive without the fundamentals. The new-build negative gearing carve-out is a real benefit, but it is not worth an oversupplied high-rise in a corridor with no land scarcity. Tax treatment improves a good purchase; it doesn't rescue a bad one.
Buying before you know your existing position. Almost every investor I speak to can tell me their portfolio's headline value and almost none can tell me their actual net position per property. In a two-speed market, the average lies to you — your weakest asset determines your refinance outcomes and your LVR headroom, not your best one.
What I'd do this month
Confirm your borrowing capacity in writing. Pull the pass-in and withdrawn lists for your two target suburbs. Model two candidate purchases — one established, one new — on after-tax holding cost rather than price. And before any of it, get a clean read on what you already own, because the strongest buying position in a soft market is knowing exactly how much room you have.
That last part is what PropAlly does. It's the portfolio command centre for Australian property investors — every property, loan, rent payment, expense and valuation in one place, whether an agent manages your properties or you do it yourself. When the market gives you leverage, the investors who use it well aren't the ones with the best forecast. They're the ones who can see their own numbers clearly. Have a look at the portfolio command centre.
For the wider context behind this quarter's numbers, the July market update has the credit and values data, and the three price scenarios into 2027 covers where this could land.
Stay sharp.
— Tob
