Key takeaways
Housing supply is rising rapidly. Total listings have increased for five consecutive months and are now at their highest level since 2019, giving buyers more choice.
Buyers are becoming more cautious. Cost-of-living pressures and interest rate uncertainty are reducing urgency, leading to weaker auction results and longer decision-making.
Sydney and Melbourne property markets are shifting in buyers' favour. Higher stock levels, softer clearance rates and increased vendor discounting suggest the balance of power is gradually moving away from sellers.
Adelaide remains the standout seller's market. Strong demand, improving clearance rates and historically low days on market continue to support sellers.
Regional markets are cooling faster than capital cities. Pandemic-driven demand is fading, with lower clearance rates and more withdrawn listings reflecting softer market conditions.
Australia’s housing market is showing clear signs of a turning point, according to Domain’s Market Insights for May, with a surge in listings across capital cities colliding with more cautious buyer behaviour,
The shift comes as households continue to navigate cost-of-living pressures and interest rate uncertainty, with early indicators suggesting the balance of power is gradually shifting back towards buyers.
Supply rebuild gathers momentum
Domain's data show that total listings have now risen for the fifth consecutive month, reaching their highest level since mid-2019 and signalling a sustained rebuild in housing stock after years of constrained supply.
While new listings declined month-on-month, May still recorded the strongest level of new supply on record for this time of year, indicating many vendors are bringing homes to market earlier to get ahead of a potential moderation in price growth.
The result is a market with greater choice and increased negotiating power for buyers.
Auction results signal weakened demand
Domain reports that auction conditions have weakened noticeably, with clearance rates across the combined capitals dropping to 54.7 per cent, the lowest May result since 2019.
At the same time, withdrawal rates have climbed to 16.5 per cent, the highest level since the pandemic-era market disruption of early 2020, as sellers adjust expectations in response to more cautious buyer competition.
Sydney and Melbourne lead shift to a buyers’ market, Adelaide holds firm
Domain notes that Australia’s two largest markets are driving the national transition:
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Brisbane is showing a similar pattern, with record May listings and a multi-year high in total supply.
Clearance rates have dropped to their lowest levels for this time of year since 2019, alongside a rise in withdrawn auctions.
In contrast, Adelaide remains the only capital city favouring sellers, with improving clearance rates and time on market at historical lows, highlighting sustained demand relative to supply.
Regional markets soften at a faster pace
Conditions are softening faster in regional Australia as pandemic-driven demand continues to unwind. Clearance rates fell to 43 per cent, the lowest May result since 2020, while withdrawn listings rose to 20.9 per cent, signalling increased caution among sellers.
Domain’s Chief Residential Economist Dr Nicola Powell said we’re starting to see a real shift in the market, both in how sellers are behaving and how buyers are responding:
“Listing activity is seasonally strong for this time of year, which suggests some sellers are bringing their homes to market earlier, likely to get ahead of a further slowdown in price.
At the same time, buyers aren’t moving with the same urgency because they’re more cautious, have more choice, and are taking longer to commit."
- Also read:National Weekly Auction Report – June 6th 2026 | Auction Markets Mainly Steady Over Holiday Week
- Also read:Supply Surges, Asking Prices Stall as Housing Market Reaches Turning Point | Latest SQM Listing Data
- Also read:Latest Property Price Forecasts. Australian Property Market Outlook 2026: Where To Now After The Rate Rise & Budget Changes.
- Also read:Home Prices Now Falling Following Rate Rises | Latest stats from Dr. Andrew Wilson
- Also read:Why Australia’s Housing Crisis Just Got More Complicated | Property Insiders
She further said:
“We’re already seeing this shift in buyer behavior reflected in the data, with softer clearance rates, and more properties being withdrawn as sellers adjust expectations.
In regional markets, that shift is happening even faster. Many of those areas saw very strong growth during the pandemic, and now we’re seeing demand normalise, particularly as affordability pressures continue to build.
Overall, we’re moving through a clear inflection point. Supply is rebuilding, buyers are regaining some power, and that sense of urgency that defined the market over the past few years is starting to ease.
What happens in the second half of the year will really come down to how these dynamics play out, particularly the balance between supply, demand, and household confidence.”
What this means for you
Of course, it's important not to confuse a market becoming more balanced with a market in decline.
What we're seeing is a normalisation of conditions after a prolonged period where limited stock and intense competition heavily favoured sellers.
I have no doubt that property values will decline in some markets, especially at the top end of Sydney and Melbourne.
The first signs of weakness are already visible in these cities’ premium markets, where higher interest rates and weaker sentiment are weighing heavily on expensive homes.
Of course, these markets are dominated by affluent owner-occupiers who are more exposed to changes in confidence, as they take on much larger loans and are more likely to delay discretionary upgrade decisions when conditions become uncertain.
While values are likely to fall further in premium markets I see no "crash" in sight, as these locations will continue to be supported by owner-occupiers who have strong incentives to hold wealth in the family home, given its tax-free status.
Currently, less expensive markets are holding their own, but for savvy buyers, greater choice and improved negotiating power because of more properties for sale create opportunities that have been scarce for some time.
For sellers, success will increasingly depend on realistic pricing and strategic presentation rather than simply relying on market momentum.
As we move through the second half of the year, the key question won't be whether supply is rising, but whether buyer confidence and borrowing capacity can keep pace with the growing number of properties coming onto the market.
