As buyers in larger capitals step back from the market amid higher interest rates and policy uncertainty, strategic purchasers can still uncover opportunities in resilient suburbs and regional centres.

A new analysis has shown buyer opportunities still remain despite increasing uncertainty around rate rises and changes to negative gearing and the capital gains tax discount.

According to an end-of-financial-year market update by the Real Estate Buyers Agents Association of Australia (REBAA) Sydney and Melbourne had seen a clear shift in buyer sentiment in recent months.

Vice president Zoran Solano said that while buyers had become more selective and value-driven, there were still opportunities in regional centres and lower-maintenance dwellings.

Similarly, Solano said sellers could still secure good prices, but they needed to be patient.

“Buyers are active, but they’re taking their time, doing more due diligence, and negotiating harder,” he said.

Here are the current market conditions:

NSW

According to REBAA NSW state representative Linda Johnson, NSW had moved into a more selective, price-sensitive phase following three consecutive rate rises and the budget.

She said Sydney was showing the clearest signs of fatigue, with Cotality reporting dwelling values fell 0.9 per cent in May, and were now 2.1 per cent below their November peak.

With prior buyer urgency subsiding, Johnson said purchasers were now less willing to compete for properties that didn’t meet their presentation, pricing, or location requirements.

“Houses at the upper end are facing greater scrutiny, while well-positioned units and lower-maintenance homes continue to attract demand as affordability pressures still shape buyer behaviour,” she said.

“Recent industry commentary supports this shift toward a more segmented Sydney market, with units holding up better as both vendors and buyers adjust expectations.”

Comparatively, she said regional NSW was more resilient, but conditions varied by location, with Cotality data showing regional NSW dwelling values rose 2.4 per cent over the first quarter and 8.9 per cent annually, with houses outperforming units.

“Newcastle, Wollongong and the Central Coast continue to benefit from commuter, lifestyle and infrastructure-led demand,” she said.

“Inland centres such as Orange, Bathurst, Wagga Wagga, Tamworth and Dubbo remain supported by affordability, local employment bases and limited quality stock.”

Ultimately, Johnson said the federal budget had seen a predominantly negative effect on market confidence, with lower auction clearance rates, discounted prices, and subdued buyer activity.

Victoria

REBAA Victoria state representative, Matt Scafidi, said Melbourne’s market remained relatively stable throughout the financial year, but buyers were becoming increasingly selective and conducting greater due diligence.

“At the coal face, we have observed a noticeable decline in investor enquiry levels and activity since the announcement, particularly for established dwellings,” he said.

“Many investors appear to be adopting a wait-and-see approach while they assess the long- term impact of the proposed reforms.”

Scafidi said the budget reforms had combined with existing challenges facing Victorian investors, including increased land tax obligations, rental compliance requirements and higher holding costs.

“The immediate impact has not been an influx of first home buyers replacing investors, but rather a reduction in overall investor confidence,” he said.

“Investors are becoming more selective, delaying acquisitions and reassessing portfolio strategies.”

Compared to the city, he said regional Victoria had remained afloat, supported by tight rental markets and attractive yields, with investor interest continuing to be strongest in locations offering affordability and population growth.

For the rest of the year, Scafidi said he expected buyer demand to remain strongest for quality, well-located family homes, while properties with perceived risk or value concerns would continue to face resistance.

“Buyers remain active and finance-ready; however, investor participation is likely to remain subdued until there is greater certainty around future taxation policy and the broader economic outlook.”

This article was first published on Smart Property Investment, a sister-brand of Property Buzz.