Should you buy property now, with rates at 4.35%, new tax rules legislated, values slipping and everyone you know saying wait? It is the question on every call we take at the moment. So let’s answer it by looking at what markets that felt exactly like this one did next.
How scared is the market in 2026
The numbers say the market is very scared. The Westpac-Melbourne Institute consumer sentiment index printed 83.9 in July, still in the bottom 10% of readings in the survey’s 50-year history. The “time to buy a dwelling” sub-index hit 72 in May, nearly 50 points below its long-run average of 119. House price expectations are down 27.5% in a year: the crowd has flipped from fearing they’ll miss out to fearing prices will fall.
Behaviour matches the mood. Combined-capital auction clearance ran at 46.0% in the week ending 5 July, 22 points below the same week last year, with Brisbane’s 23.5% its weakest read since April 2020. Clearance has now spent roughly two months under 50%. Total listings are up 6.1% year on year nationally, with Sydney up 17% and Melbourne up 20% (SQM Research). Capital city sales in the three months to June ran 16.2% below last year, investor loan numbers fell 5.3% in the March quarter (ABS), and national values slipped 0.4% in June, the largest monthly fall since December 2022, with Sydney now 3.7% off its January peak.
From a buyer’s side instead of an owner’s, that same list means more stock to choose from, fewer bidders next to you, agents calling back, vendors negotiating, and a month of falling prices as your anchor. Every condition that makes buying hard in a boom has reversed. The discomfort you feel is what negotiating leverage feels like from the inside.
May 2020: forecasts vs what happened
The cleanest test of fear as a forecast came in May 2020. With auctions banned and the economy in lockdown, CBA’s worst-case scenario had home values down 32% by end-2022; NAB’s severe scenario was around minus 30%; Westpac’s base case was minus 15% in 2020 alone. These were the country’s biggest lenders, publishing with full conviction.
The actual fall was 2.1% between April and September 2020. Then national values rose 22.1% over calendar 2021, the fastest annual pace since 1989, for a trough-to-peak run of 24.6% by February 2022. The buyers who transacted into the fear bought at the bottom of that entire sequence. The ones who waited for the banks’ scenarios to play out paid 20% more for the same houses two years later.
2008, 2019, 2023: same fear, same ending
That was not a one-off.
2008. National values fell 7.5% over the 2008 calendar year as the GFC hit. The following year, the ABS eight-capital index rose 13.6% over 2009, with Melbourne up 19.7%, as rate cuts and first home buyer support met a market everyone had written off.
2019. The closest cousin to today: a national fall of 8.4% from late 2017, Sydney down 14.9%, credit squeezed, and a federal election fought partly on abolishing negative gearing. Investor lending was still shrinking in May 2019. Sydney and Melbourne bottomed that same month, and the national index floored in June. Within six months, Sydney was up 5.3% and Melbourne 6.0% from their lows, with Melbourne’s November gain its largest month since 2009.
2022-23. The fastest rate tightening in a generation cut national values 7.5% in nine months to a floor in January 2023, with most forecasters expecting more falls. Ten months later the index was at a new record high, up 8.1% from the trough. Cotality’s Tim Lawless said at the time: “The ‘V’ shaped recovery may seem counter-intuitive, given high interest rates, deeply pessimistic levels of consumer sentiment and high cost of living pressures.” Demand had simply been running ahead of supply the whole way through the fear.
Three different fears played out with the same shape. The sentiment trough and the price trough arrived close together, and the recovery started while the headlines were still grim. Nobody rings a bell. By the time sentiment feels comfortable again, the discount is gone. Even now, the early tells are appearing: the time-to-buy index has climbed from 72 to 85 in two months, and Ray White’s auction data shows investors already drifting back after the budget shock.
When buying the dip goes wrong
Here is the part the spruikers leave out, because a one-sided version of this argument would deserve your scepticism.
Low sentiment is not, by itself, a buy signal. Perth proved it: values fell 20% between June 2014 and September 2019, more than five years of decline, and plenty of people who “bought the dip” in 2015 waited seven years to break even. Melbourne today sits 4% below its March 2022 peak, four years on. And 2026 has genuine differences from 2019: the tax change is law this time, not a defeated proposal, and every rebound above coincided with rate cuts that have not happened yet, with the RBA next meeting on 11 August.
What separated Perth 2014 from every rebound story above was never sentiment. It was fundamentals: Perth’s downturn came with a mining-driven population bust and years of oversupply. The rebounds happened where demand kept outrunning supply beneath the fear. That is precisely the check that matters now, and it is why we keep publishing the supply-side data: lot production below decade averages, national completions running well behind the Housing Accord target, and vacancy near record lows in the corridors we buy in. Fear with a supply shortage underneath it has historically resolved upward. Fear with oversupply underneath it, as Perth showed, has not.
Hold 9 years, not 4
One more dataset matters here, because the point of buying in a fear market is what the asset does over the following decade, not the following quarter. Cotality’s latest Pain and Gain report analysed roughly 101,000 resales in the March 2026 quarter: 96.0% sold at a nominal profit, the highest share since 2005, with a record median gain of $377,000. The sellers who lost money held for a median of 4.3 years. The ones who profited held for a median of 9.1 years. Over the 30 years to 2022, national values compounded at 5.4% a year through six separate downturns. The market has paid people for time and punished them for flinching, in every cycle on record.
How to buy a fear market properly
None of this is a promise that July 2026 is the exact bottom. Nobody knows that, and anyone who claims to is selling something. What the data supports is narrower and more useful:
- Competition is measurably thin. Sub-50% clearance and rising stock mean negotiation leverage that did not exist 18 months ago and will not survive the next sentiment turn.
- Buy fundamentals, not the dip. Tight vacancy, real yield, supply running behind demand, priced below replacement cost. If those boxes tick, low sentiment is a discount. If they don’t, it’s Perth 2014.
- Structure for the new rules, not the old ones. Post-budget purchases carry the 2027 tax treatment, which rewards properties that pay their own way. Buy the yield first and let rate cuts be upside, not the rescue plan.
- Stress-test at today’s rates. If the numbers only work after the RBA cuts, the numbers don’t work.
The pattern in every episode above is that the window closed quickly and quietly. Sentiment is already two months off its May floor. We’re not saying hurry. We’re saying the data that will eventually make everyone comfortable again is the same data that will remove the discount.
Fear is a price signal
Every rebound in this post was bought by people who transacted while the consensus said wait, in markets where the fundamentals disagreed with the mood. The mood right now is in the bottom decile of half a century. The fundamentals, in the corridors that matter, are not. That gap is the opportunity, and history has not been kind to the people who waited for it to feel safe.
Sources
- Consumer Sentiment Bulletin, July 2026 - Westpac-Melbourne Institute
- Final auction clearance rates, week ending 5 July 2026 - Cotality
- National property listings, June 2026 - SQM Research via AdviserVoice
- House prices have fallen - Cotality June 2026 data via The Daily Aus
- Investor lending slips as budget reforms reshape incentives (ABS data) - YIP
- CBA and bank COVID forecasts, May 2020 - The New Daily
- How COVID shaped the housing market - CoreLogic’s Eliza Owen
- CoreLogic dwelling values, January 2022 - Savings.com.au
- Housing values trough-to-peak - The Urban Developer citing CoreLogic
- Established house price indexes, December 2009 - ABS
- 2019: the year of records - CoreLogic via Broker Daily
- V-shaped recovery to a record high, November 2023 - Cotality via Property Update
- Perth dwelling values hit new record highs - CoreLogic
- Pain and Gain, March quarter 2026 - Cotality
- Investors returning after budget blow - Ray White data via AAP
This is general information only and not financial advice. Past market cycles are not a promise about this one, and nobody can time the exact bottom of any market. Speak to a qualified professional before making investment decisions.
See how we find the corridors where the fundamentals disagree with the mood.
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