Quick answer: for first home buyers who are ready, conditions in Sydney are the most buyer-friendly they have been in years. Sydney values were 8.6% below their February 2026 peak in September, and first home buyer demand in NSW was down 22.8% on a year earlier, so there is less competition and more room to negotiate. The catch is cost: the cash rate is 4.60% and could rise again. If your income is secure, you can afford the repayments with a buffer and you plan to stay five to ten years, a quiet market can work in your favour. Nobody can pick the bottom.
Every week someone asks us whether they should buy now or wait. It’s a fair question: prices are falling, rates have gone up, and the headlines are gloomy. Here is what the latest numbers show, what they mean for a first home buyer, and how to decide for yourself.
What the latest numbers show
| Measure | Latest | Source |
|---|---|---|
| Sydney home values, September | −1.4% in the month; median $1,198,596 | Cotality |
| Sydney values vs February 2026 peak | −8.6% | Cotality |
| Capital city suburbs falling (three months to September) | 97% | Cotality |
| First home buyer loan demand, September | −22.1% nationally, −22.8% in NSW (year on year) | Equifax |
| Average first home buyer loan | About $743,000 (a record) | Equifax |
| Cash rate | 4.60% (raised 29 September 2026) | RBA |
| Unemployment, September | 4.7% | ABS |
In short: fewer first home buyers are applying for loans, prices are falling across almost every suburb, and borrowing costs more. The full price picture is in our property prices update.
Why a quiet market can help first home buyers
- Less competition. With demand down more than a fifth, fewer buyers turn up to inspections and auctions, and fewer bid against you.
- Room to negotiate. Sellers who need to move are more open to offers below the asking price, longer settlements, and finance and building-and-pest conditions in the contract.
- Time to do it properly. In a hot market buyers rush. Now you can get inspections, read the strata report and compare properties before committing.
- The schemes still apply. NSW first home buyers pay no stamp duty up to $800,000, the 5% Deposit Scheme removes LMI up to $1.5 million in Sydney, and Help to Buy offers a 2% deposit for eligible buyers on moderate incomes.
The risks to weigh
- Prices may fall further. If you buy and values keep sliding, your home could be worth less than your loan for a while. That matters most if you might need to sell within a few years.
- Rates may rise again. Some bank economists expect another rise this year. See what to watch before the 3 November RBA decision.
- Jobs are softening. Unemployment has risen to 4.7%. Your own job security matters more than any market forecast.
- Valuations can come in low. In a falling market, a bank valuation below the contract price can leave you short. Here’s what to do if that happens.
Waiting vs buying: the numbers
Take an $800,000 Sydney apartment bought with a 5% deposit under the 5% Deposit Scheme (a $760,000 loan, $0 stamp duty for an eligible first home buyer). Here is how the two things everyone worries about change the repayment.
| Scenario | Loan | Rate | Monthly repayment* | Change |
|---|---|---|---|---|
| Buy now | $760,000 | 6.45% | $4,779 | — |
| Rates rise another 0.25% | $760,000 | 6.70% | $4,904 | +$125 a month |
| Price falls another 5% (to $760,000) | $722,000 | 6.45% | $4,540 | −$239 a month |
*Principal and interest over 30 years. Illustrative owner-occupier rates; your rate depends on your lender and loan.
A 5% price fall saves more than a 0.25% rate rise costs, which is why waiting looks tempting. But neither is certain, they rarely happen in isolation (when rates eventually fall, buyers come back and prices tend to firm), and while you wait you keep paying rent. If you buy now and rates later fall, you can refinance; you can’t go back and buy at an earlier price.
Five questions to decide if you’re ready
- Is your income secure? Stable employment for at least six to twelve months, with no big changes coming.
- Could you handle another rate rise? Lenders test you at your rate plus 3%, but check your own budget at 0.5% higher too.
- Will you stay five to ten years? The longer you hold, the less a short-term price dip matters.
- Will you have a buffer after settlement? One to three months of repayments set aside, ideally in an offset account.
- Is your pre-approval current? Borrowing power fell after the September rise. A pre-approval from before then may now be lower. See how much less you can borrow.
How to buy well in a falling market
- Get finance-ready first. A fresh pre-approval lets you move quickly when the right property appears, and negotiate with confidence.
- Use recent sales, not asking prices. In a falling market, last spring’s sales overstate today’s values.
- Keep conditions in the contract. Sellers are more likely to accept finance and building-and-pest clauses now than at the peak.
- Buy what will stay in demand. Close to transport, schools and jobs, with good layout and light. These hold value better through a downturn.
- Avoid the common traps in our 10 first home buyer mistakes.
Buying a first home in Sydney now: common questions
Is now a good time to buy a first home in Sydney?
Conditions have shifted towards buyers: Sydney home values were 8.6% below their February 2026 peak in September, and first home buyer demand in NSW was down 22.8% on a year earlier, so there is less competition and more room to negotiate. Against that, rates are higher and may rise again. If your job is secure, you can afford the repayments with a buffer and you plan to stay at least five to ten years, a market with fewer buyers can work in your favour.
Will Sydney property prices keep falling?
Nobody knows. Sydney values have fallen for several months in a row, and higher interest rates are weighing on what buyers can pay. Prices could fall further, flatten or recover, and individual suburbs and property types move differently. We don’t try to predict the bottom; we help you buy something you can afford to hold through the cycle.
Should I wait for interest rates to fall before buying?
Waiting has costs too. In our example, a 5% fall in price would cut repayments by about $239 a month, while a further 0.25% rate rise would add about $125. Prices and rates often move in opposite directions: when rates fall, more buyers return and prices tend to firm. If you buy now, you can refinance later if rates fall.
What is the risk of buying with a 5% deposit when prices are falling?
If prices fall further after you buy, your home could be worth less than your loan for a while (negative equity). That only becomes a real loss if you have to sell. Buying a home you plan to stay in, keeping a cash buffer and choosing a property with lasting demand all reduce the risk.
What first home buyer help is available in Sydney?
Eligible first home buyers in NSW pay no stamp duty up to $800,000 and reduced duty up to $1 million. The 5% Deposit Scheme allows a 5% deposit with no LMI up to $1.5 million in Sydney, and Help to Buy offers a 2% deposit with a Government equity share for eligible buyers on moderate incomes. New homes may also qualify for the $10,000 First Home Owner Grant.
Talk it through
Whether now is right depends on your income, savings and plans, not the headlines. We’ll check what you can borrow at today’s rates, which schemes you qualify for, and what your repayments would be on the homes you’re looking at. This is general information, not advice for your situation.