Who are the winners of Australia’s house price slump? According to experts, almost everyone’s a loser

Australia’s housing market has weathered a remarkably sharp price downturn since May, resulting in a ripple effect of consequences for buyers, sellers, owners and renters.

The country’s median property value has slumped by 3.6 per cent compared to a record-high in March – resulting in weak auction rates and tighter stock as wary sellers pull their homes off the market.

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A capital city breakdown paints an even grimmer picture.

In Melbourne, home prices have fallen 5.3 per cent below their peak in October 2025, and Sydney property prices have plunged by 7.1 per cent below a February 2026 peak.

The federal government had billed its property tax changes as clearing the path to home ownership for young people.

But is it actually helping?

According to mortgage brokers and finance experts, there are only two classes of Australians who may be benefiting – upsizers and cash-rich first homebuyers.

THE WINNERS

Upsizers

Homeowners who were waiting for the right time to upsize into a bigger property are among the biggest winners of this generational price downturn.

FinSavvy director and co-founder Sina Enayati told nine.com.au that upsizers are leveraging the price slump to sell their existing home and nab another house at a major discount.

He said this is happening across Sydney, where some suburbs have recorded home values declining by up to $600,000.

“You can buy a property at 2 million that’s gone down 20 per cent, so now it’s $1.6 million,” Enayati said.

“The gap between their current existing property of a million and up to the next property has decreased significantly. So people are taking that opportunity to upsize.

“They’re getting more bang for their buck. It’s a really good time for them.”

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Some first home buyers

A softer market has been a Godsend for many first homebuyers.

According to the Australian Bureau of Statistics (ABS), Australia recorded 29,319 first home buyer loan commitments for during the June quarter of 2026.

Young buyers are taking advantage of lower prices to enter a market they were once locked out of.

But brokers say it’s only benefiting those who could afford a 20 per cent deposit.

“And if they’re not planning on moving or selling or utilising equity on the property, the downturn isn’t really a problem for them,” founder of Sydney-based firm Novaseed, Andrea Torres told nine.com.au.

Homeowners refinancing

Homeowners who have been building equity on their properties are now in “maintenance” mode.

Enayati said the price slump has been a golden opportunity for long-term owners to ask lenders and banks to refinance their loans.

“We’re doing we’re doing a lot of rate reviews, of loan reviews, portfolio reviews, moving stuff around and switching stuff to interest only,” Enayati explained.

“We’re very busy with this kind of work.”

THE LOSERS

First home buyers who used 5 per cent scheme

New homeowners who put a smaller cent deposit down under the federal government’s five per cent scheme may be finding themselves in financial hot water.

QuickPath Lending founder Jacob Nutt said that, while thousands of Australians have entered the market, many may be at risk of slipping into negative equity.

“There’s a massive issue where people have put a five 5 per cent deposit down, purchased their property six or 12 months ago, and now they’re actually they’ve actually got negative equity in the property,” Jacob Nutt said.

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“They’re kind of stuck as well, so they don’t have the ability to move because they’re going to lose money and have to pay back more than they actually owe.”

Enayati described this as a type of “mortgage prison”.

Borrowers wanting to switch lenders while their loan-to-value ratio is above 80 per cent will have to pay Lenders Mortgage Insurance (LMI), which was waived under the government deposit scheme.

“If they are only going in with a 5 per cent deposit, if market goes down, they’ve lost money, but it’s also kind of trapping them into that mortgage,” he added.

“You can still refinance out, okay. However, it comes with an insurance expense, which is it means it wouldn’t be worthwhile.”

Real estate and buyer’s agents

Property agents are battling weak auction clearance rates across almost every capital city.

As sellers sit on their hands and wait for the downturn to change course, real estate agents are losing business.

“I’ve seen quite a few buyer’s agents just deciding whether to close shop or not because of investors not being in the market,” Torres said.

Renters

Renters are among the biggest losers of the property price downturn.

Spooked investors have responded to the property tax changes through nationwide rental increases.

Combined capital city house rents jumped by $20 over the June quarter, which was the strongest annual growth in two years.

The national median weekly advertised rent also increased 3.1 per cent to $670.

Torres said she knew renters would be hit the hardest as soon as the government delivered the May federal budget.

“A lot of people I know are self-employed and have investment properties... three of them immediately called the real estate agents, saying to increase the rent,” she said.

“Renters are definitely at the top of this list.”

Business owners

One of the more unexpected losers of the price downturn are the already-struggling small business owners.

Torres said self-employed Australians have noticed a reduction in cash flow as sellers pull their homes off the market and buyers hold fire.

She said businesses including moving companies, property photographers, conveyancers, building and pest report providers and tradies are losing business.

“It’s not just the property market itself; it trickles down significantly. Most of them are small business owners,” Torres explained.

“Their cash flow is definitely tightening up.

“We’re sitting quite close to the point where changes in household confidence, borrowing capacity and business investment actually show up in real transactions.”

Investors

Many investors have all but abandoned the residential market in the wake of the property tax changes.

Investor loans have dropped by 15.75 per cent in the 12-month period ending in August 2026, according to data from Loan Market.

And those with multiple properties are expected to lose the most wealth as their property portfolio drops and interest rates increase.

“Mum and dad investors who had the aspiration of building wealth for their retirement... now all of a sudden it’s not an option there,” Torres said.

Mortgage brokers

Brokers are facing an unprecedented drop in new loan applications, which is a healthy chunk of their business.

According to Loan Market data, first-home buyer loans are down 12 per cent comparing August 2026 to August 2025.

Some brokers claim they have lost more than 50 per cent of their business.

“In the last 10 years, I would think this is the biggest slump, driven mostly by the property prices,” senior mortgage broker Prakash Rai of Home Loan Experts previously told nine.com.au.

“There’s not much transaction happening at the moment, people aren’t selling and because they aren’t selling, there’s not many new stocks in the market.”