The Quarterly
Author
BresicWhitney
Q3 2026
A fourth interest rate rise, a rental market adjusting off historic lows, and a spring season arriving without the anticipation that typically precedes it. The conditions shaping Q3 were, in many ways, a continuation of what Q2 set in motion - only more so.
Buyers came back before sellers did. Buyers met across the quarter rose 27% on Q2, from 13,686 to 17,327, with the average per listing jumping from 19 in July to 31 in August before easing to 27 as new listings built through the quarter, from 95 in July to 120 in September.
Despite the lift in buyer activity, sales were down 21% on Q2 and 30% on the same quarter last year, tracking at 251 against 317 and 360 respectively. BresicWhitney recorded 251 sales across the quarter for a total of $552 million against 282 in the same window last year. Homes that sold moved faster as the quarter progressed, from 42 days in July to 35 in September, a 17% improvement — though still 52% above the 25 days recorded in the same quarter last year.
The Reserve Bank of Australia lifted the cash rate to 4.60% in September, its fourth increase of 2026 and the highest level since 2011. Buyers entering the market today are being assessed at rates above 7%, a stress test that sits behind every number in this report.
Cotality's Home Value Index has Sydney values down 1.4% in August and 7.1% below the February peak. At the same time, the week ending 13 September produced the highest combined capitals auction clearance rate in nineteen weeks. The two figures point in different directions, with the gap between them where the more interesting story sits.
Rate cuts are not expected until mid to late 2027. What is happening within that window - how Sydney is selling, where demand has concentrated, and what it means for the people making decisions about where they live - is what this edition of The Quarterly explores.
“This isn’t a dip like the cycles before it. It’s an extended downturn, and this quarter confirmed it. Rates are at 4.60%, cuts aren’t expected until mid to late next year, and Cotality now has the national downturn on track to be the deepest in 40 years.”
What Has Us Talking.
Just as the market changes, so does the method of sale.
How Sydney property sells is as much a reflection of market conditions as what it sells for. This time last year, off-market sales accounted for nearly a third of BresicWhitney transactions. This quarter it sits at 15.1%, declining steadily – as conditions have shifted, so has the value of broad market exposure, with vendors increasingly choosing the reach of a full campaign to find the right buyer.
Running alongside that is a broader Sydney trend: the way in which a home launches to market, is not necessarily the way in which it sells. Domain's September research revealed that more than half of all auction-launched campaigns are now converting to private treaty before or after auction day, up from one in four in February. The shift has been most pronounced in the premium Inner City markets where auction was the dominant method of sale. Properties across Sydney's Eastern Suburbs and pockets of the Lower North Shore – namely North Sydney and Mosman – recorded significant shifts: Eastern Suburbs South quadrupled from 12.3% to 52.0%, Eastern Suburbs North from 15.1% to 56.7%, North Sydney and Mosman from 15.4% to 50.6%.
For BresicWhitney, the shift is steadier – and the direction within the quarter is telling. Pre-auction sales rose every month, from 28.9% in July to 39.2% in August to 42.4% in September, averaging 36.7% across the quarter and making it the most common way homes sold. Private treaty accounted for 18.7% across the quarter, drawing as many properties from off-market as from auction. The read is therefore that choice is widening – auction, private treaty and off-market are increasingly treated as three viable routes rather than one default and two fallbacks, and vendors are choosing between them deliberately.
“The method of sale matters less than the quality of execution around it. What’s changed is the cost of getting either wrong.”
What has also changed visibly is buyer behaviour inside the campaign. Buyers are less guided by a price guide, and more by their own read of the opportunity in front of them. Vendors who understand that are adjusting accordingly.
Mr Gosse said the dynamic between buyers and sellers had shifted, with less competitive conditions affording buyers more negotiating power. "The most successful campaigns right now are the ones where the seller is ready to meet the market, and where the agent and the seller have agreed on price and value before launch."
Upcoming state legislation mandating price guide disclosure across New South Wales will reinforce that direction.
The shift is not confined to those buying or selling. In the rental market, a similar dynamic is playing out between owners and tenants. BresicWhitney's rental portfolio recorded 185 new homes under management and 449 properties leased across the quarter, with an average weekly rent of $959.87 and a vacancy rate of 1.84%. Rental inspection attendance held firm, with more than 5,400 prospective tenants through opens across Q3, broadly in line with Q2.
“Quality homes are still leasing well when they’re priced appropriately,” said Chantelle Collin, BresicWhitney Head of Property Management. “What’s changed is that tenants are more selective and taking a little more time before committing. Property owners who understand that shift and position their property accordingly are generally achieving stronger outcomes.” Ms Collin added that property presentation and upkeep remained essential to meeting market expectations.
Where demand concentrated.
Sydney's property market shifted in Q3, though not in the way most headlines suggest.
The $3 million to $4 million segment, the upper-middle where competition was fiercest eighteen months ago, recorded the sharpest fall in its share of BresicWhitney sales, from more than one in seven transactions in Q1 to fewer than one in fifteen now. Below it, sales under $1.5 million held firm and grew considerably by volume. Above it, the $6 million-plus band held steady. It is the band in between that absorbed the adjustment.
Auction results tell the same story. Homes under $1.5 million sold close to their reserve price, with little change year on year. Homes between $1.5 million and $3 million moved further, from an average 3.44% above reserve a year ago to 2.38% below it this quarter.
As investor demand pulled back - lending for established dwellings fell 14.8% in the June quarter (ABS Housing Finance, June quarter 2026), the largest quarterly fall since 2020 – a different cohort of buyers moved in. Owner-occupiers and first home buyers found less competition, more stock and more time in the sub-$1.5m band than they have seen in years. For those keeping a longer view, NAB's twelve-month outlook has prices easing 2.5% against rents rising 3.9% – a combination that hasn't existed for some time.
The legislative changes that reshaped the investment conversation earlier this year are beginning to show up in the rental market, though not yet in the way many anticipated. Large-scale moves by investors to exit the market have not materialised across BresicWhitney's portfolio. However, the pipeline of new investment is thinner, and that will be felt in supply terms over time.
“Most owners are taking a considered approach rather than making reactive decisions,” said Chantelle Collin. “What we’re watching more closely is the impact on future supply. Investment activity is thinner than it has been, and while reduced supply can place further pressure on rents, there is a limit to how far tenants can stretch. Wages have not kept pace with the rising cost of living, so affordability is increasingly shaping where people live, the type of property they choose and, in some cases, whether they share or consolidate households.”
Nationally, dwelling values fell 3.1% over the quarter, according to Cotality. But what that figure does not capture is how differently individual suburbs performed within it. Suburbs such as Balmain, Paddington, Newtown, and Rozelle – within kilometres of one another – have reflected different narratives and pockets of outperformance this quarter. An Inner West listing drew roughly twice as many inspections as an Eastern Suburbs listing in every month from April to September – 50 against 20 in August at the peak. The Eastern Suburbs climbed from 12 buyers per listing in July to 23 in September. Meanwhile, markets on the north side of the harbour recorded a fraction of that activity, with spring yet to fully arrive there.
More attention has not necessarily meant more generous offers. Across all auctions, the proportion of homes selling above reserve fell from 62% in Q3 2025 to 31% this quarter, with the average premium above reserve falling from $203,607 to $90,000. Buyers are engaged and active – and they are also disciplined. The divergence is not between Sydney and the rest of the country. It is happening suburb by suburb, street by street, and the gap between what the headline says and what's happening at ground level can be significant.
“The divergence between neighbouring postcodes is the number that matters. A city-wide percentage isn’t a market anyone actually buys or sells in.”
The value in lifestyle.
The emotional calculus of Sydney property - the suburb, the school, the street, the life it represents, doesn't pause for a downturn. What changes is how people move within it.
Domain’s Nicola Powell captured it clearly in her most recent Matching Demand report. For decades, affordability pressures pushed buyers further from the CBD. Today, many are making a different calculation – choosing a townhouse or apartment to stay closer to jobs, transport and the neighbourhoods that matter to them, rather than moving to the urban fringe for more space. The biggest divide in Australia's housing market, Powell argues, is no longer simply between inner and outer suburbs. It is increasingly between detached houses and medium-density housing, with townhouses and apartments emerging as the point where buyer demand and available supply are most closely aligned.
BresicWhitney operates almost entirely in the geographical radius that shift plays out, and the composition of what sold this quarter reflects it. The growth in sub-$1.5m transactions is not only a story about affordability: buyers are staying close to the areas they want to reside in, trading floor space for proximity and lifestyle.
The rental market is navigating its own adjustment. Vacancy in Sydney has eased to 2.2%, up from 1.8% a year ago according to REINSW, while vacancy across BresicWhitney's portfolio sat at 1.84% for the quarter. While Sydney rents are still rising – averaging $959.87 per week, up from $914.10 in Q3 2025 – it is at the slowest rate of any capital city. Affordability is reshaping decisions at both ends of the spectrum, with tenants committing a significantly higher share of their income to rent than they were five years ago. That pressure is changing not just where people choose to live, but what they are willing to live in.
“We’re seeing affordability play a much bigger role in how renters make decisions,” said Chantelle Collin. “Location and lifestyle are still important, but as rents have increased, more tenants are widening their search and considering areas that offer better value. Well-presented and appropriately priced homes are still attracting strong interest, but increasingly we’re seeing tenants balance where they want to live with what they can realistically afford.”
The cost of waiting.
The same logic extends to those considering a move up the ladder. Cotality's data shows Sydney's upper quartile houses are already down more than 10% from peak, while the lower quartile has fallen considerably less. The gap between the home someone owns and the home they want has narrowed in dollar terms, and that window doesn't stay open indefinitely.
Building new is not getting cheaper either. House construction costs rose 2.1% in the June quarter, the largest quarterly increase since December 2022, and are up 5.9% annually. The new build that might once have competed with an established home at the top of the market is now priced further away from it, not closer.
"For upgraders, the gap between the home you own and the home you want has narrowed in dollar terms, because the top of the market has fallen furthest. That's worth knowing. What nobody can tell you is where the bottom is, because the market never signals it," said Mr Gosse.
View from Here.
The RBA's decision to lift the cash rate to 4.60% in September was widely anticipated, and for most buyers already in the market, already factored in. What a confirmed decision provides that months of uncertainty could not is clarity. For those sitting on the sidelines, knowing is more useful than wondering. A rate cut still looks unlikely before the second half of 2027, but the path ahead is clearer than it was.
"Most buyers active right now had priced in a rise. Few had priced in more than that. Clarity helps, but with another move still being debated for November, it isn't certainty, and people on the sidelines tend to get on with it once they know,” said Mr Gosse.
Policy decisions made this year are already reshaping individual calculations at the street level. One worth watching closely is the NSW Government's rezoning plans for Edgecliff and Woollahra, released on 8 September, proposing 9,400 new dwellings, and a new Woollahra station due to open in 2029. A vendor within 800 metres of the proposed station is making an entirely different calculation to one two kilometres away – in the same suburb, at the same moment in the cycle. For the rental market, it is also a future supply story, and the years between now and 2029 will tell much of it.
Sydney property has absorbed a great deal over the years - rate cycles, policy shifts, global uncertainty. What tends to outlast all of it is people's relationship with where they live. The buyers forming views at open homes this September are, in Will Gosse's experience, the people who will be transacting early next year. The vendors who will get the best results between now and then are the ones having honest conversations today.
"Sydney keeps moving, just at a different pace. The method changes, the band of the market that's most active changes. What doesn't change is that people still want to live here, and that's the foundation everything else is built on,” concluded Mr Gosse.
