Investors and first home buyers have been urged to rethink their property plans for 2026, as economic pressures and market shifts could lead to significant financial losses over the next 12 months.

An Australian property expert has warned residential investors and first-time buyers to think twice before buying a property for the remainder of the year, as current economic and global conditions have been shifting the market.

Co-founder of real estate agent comparison service bRight Agent, Angelina Scott, said that while the property market had been strong over the last couple of years, the months and years ahead looked uncertain.

She warned that mounting economic pressures could weigh on returns and result in substantial losses for property investors over the coming year.

“There’s no denying the market has been incredibly strong over the past few years, but we’re starting to see clear signs that things are changing,” said Scott.

“The war in the Middle East could result in inflation well over 5 per cent for the remainder of 2026. With waning consumer sentiment and higher interest rates looking likely, property prices could see a substantial downturn.”

According to Scott, buyers could not ignore the recent signs of softening across major capital cities.

Recent Cotality data showed that since the end of November 2025, Sydney and Melbourne have started to experience a downturn, with dwelling values dropping by 0.4 and 0.9 per cent, respectively.

Similarly, auction clearance rates have softened, recording their lowest preliminary auction clearance rate for the combined capitals in four years, falling to 55.5 per cent in the week ending 5 April 2026.

Cotality’s Property Market Indicator Summary found that the early clearance rate was the lowest since July 2022 and the first time the figure had fallen below 60 per cent since December 2022.

Scott said that while investors should be mindful of the data and analyse the market before purchase, first home buyers were the most at risk, especially if buying under the 5 per cent scheme.

bRight Agent said that under the 5 per cent deposit scheme, first home buyers would be exposed to greater financial hardship, as low deposits, high prices and rising economic pressures increase the risk of falling values and mortgage stress.

“For the remainder of 2026, highly leveraged first-home buyers are likely to face a tougher environment – higher interest rates, higher cost-of-living pressures including petrol, ongoing maintenance costs, and in some cases, the reality of having paid too much at the peak,” she said.

While a 5 per cent deposit may seem appealing, bRight Agent said it increases your loan-to-value ratio and leaves buyers exposed to falling property values, which can quickly result in negative equity if the market declines.

“When you stack all of that together, and you don’t have a lot of equity to rely on, property starts to look like a very risky financial proposition in 2026 compared to recent years.”

Scott said that owners struggling with mortgage pressures can consider selling, provided they secure reasonable real estate fees, noting that selling property is far more costly than selling shares or bonds.

While taxes are unavoidable, bRight Agent said that commissions typically range from 1.5 to 3 per cent, plus additional marketing costs for advertising, photography and listings.

“Also keep in mind that if you’re forced to sell, you could easily be paying out over half of your remaining equity with 2–3 per cent agent fees plus marketing costs,” she said.

“For anyone thinking about investing or buying a first home this year, it’s critical to take a step back, look at the broader economic picture, and understand what the risks and costs are before making a move,” Scott concluded.

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