Downturn extends to sixth month
Welcome to State of the Market, our monthly roundup of key property market updates, with market commentary for small and medium-sized property developers.
Key takeaways:
- Downturn extends to sixth month
- RBA hikes rates as inflation persists
- Dwelling approvals fall as apartment pipeline weakens
- Trust tax changes threaten SME developers
- Downward slide makes for buyers' market
Downturn extends to sixth month
The Home Value Index fell 1.1 per cent, extending the decline in Australian home values to its sixth consecutive month. 97 per cent of capital city suburbs have posted dwelling value declines over the past three months, with Darwin the only capital to dodge a decline in the past month.
"The sharp drop in sales has implications for the broader economy, with lower sales likely to hit some retail segments as well as stamp duty revenues for state governments…the lift in available stock is improving choice for buyers, but ironically, many prospective buyers don't have the confidence or financial capacity to buy at the moment."Tim Lawless, Cotality research director
Source: Cotality
What this means for SME developers: For SME developers holding sites, falling values and weaker buyer demand are likely to extend sales periods, squeeze margins and increase holding costs, reinforcing the importance of flexible financing partners that can help developers navigate slower sales and release capital. For developers looking for new opportunities, there is less competition for sites.
RBA hikes rates as inflation persists
The Reserve Bank of Australia (RBA) raised the cash rate by 25 basis points to 4.60 per cent in September, its fourth increase of 2026, as persistent inflation continued to concern policymakers.
The monetary authority felt that inflationary pressures remain strong enough to warrant further tightening, adding to mortgage costs and reducing borrowing capacity for prospective homebuyers.
Economists remain divided as to whether the RBA will implement another hike in November, as energy prices continue to contribute to broader inflationary pressure.
Source: The Reserve Bank of Australia
What this means for SME developers: While higher rates are creating a more challenging funding environment, developers with access to flexible finance remain well placed to progress viable projects and capitalise on opportunities, particularly if competitors struggle to secure funding.
Dwelling approvals plunge as apartment pipeline weakens
Australian dwelling approvals fell 6.1 per cent in August to 16,953 homes, highlighting continued pressure on the country's housing development pipeline.
The decline was driven by a 21.2 per cent fall in approvals for private-sector dwellings excluding houses, which include apartments and townhouses. Approvals for detached houses rose 3.7 per cent.
The figures underline the difficulty of increasing housing supply despite continued demand for new homes, with higher construction and financing costs continuing to weigh on project feasibility.
Source: The Australian Bureau of Statistics
What this means for SME developers: Falling approvals point to a thinner pipeline of new housing supply, potentially creating greater opportunities for SME developers able to bring well-located projects to market as competition for buyers eases.
Trust tax changes threaten SME developers
Proposed changes to the taxation of discretionary trusts could undermine Australia's housing development pipeline, with new industry polling finding more than 60 per cent of SME residential and commercial developers expect the reforms to affect project timing or viability.
Of those expecting an impact, 37 per cent said at least one project could be cancelled. The proposed reforms would impose a minimum 30 per cent tax rate on discretionary trust distributions, a structure widely used by smaller property developers.
HIA chief economist, Tim Reardon said new home sales had already fallen 10 per cent in August, warning the market "cannot absorb further interest rate increases on top of the tax increases".
Source: Australian Broker
What this means for SME developers: The proposed changes add another consideration to project structuring and feasibility, making careful capital planning and reliable access to development finance increasingly important when bringing new projects forward.
Downward slide makes for buyers' market
Flux said the ongoing downward slide in the housing market will create more opportunities for smaller developers to acquire properties at favourable prices.
"We are seeing the number of sales start to increase and the number of days on the market start to expand, which are very early indications of a true buyers' market," Flux said.
"We are going to see more desperate sales coming through - vendors are becoming more realistic and giving us more favourable terms."
Flux expects another rate hike in November, which will further soften the market over the Christmas and New Year holiday season.
A recovery in Australia's housing market could arrive by mid-2027, however, with certain markets such as Melbourne staging rebounds sooner.
Source: The Property Developer Network
What this means for SME developers: Softer market conditions could provide well-capitalised SME developers with a valuable window to secure development sites at more attractive prices and negotiate more favourable acquisition terms.
"The market is undoubtedly challenging, but we're also seeing opportunities emerge for SME developers as land prices soften, competition for sites eases, and vendors become more flexible. Developers who have access to capital and can move quickly are well positioned to take advantage of these conditions and deliver projects into what remains a fundamentally undersupplied housing market."David Ingram, CEO of CrowdProperty Australia
CrowdProperty provides fast, simple and transparent property project finance for property professionals, learn more.
Opinions or views expressed represent the thoughts of individuals and not those of CrowdProperty or Quay Fund Services.