While some prospective buyers may welcome a fall in home values – a series of interest rate hikes mean their borrowing capacity is still failing to keep up.

National home values have dropped 6.7 per cent since the peak in March, according to Cotality.

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But a fifth cash rate hike tomorrow could see a person’s maximum purchasing budget drop by 11 per cent.

In real terms, the nationwide downturn equates to a decline of approximately $63,400 off the median Australian home over the past seven months.

But a fifth-rate hike would wipe $116,200 off an average full-time earning couple’s purchasing power since the start of this year, according to Canstar analysis.

Cotality Research Director, Tim Lawless, said while lower prices are healthy in some ways for first home buyers, the biggest challenge remains serviceability.

“It’s definitely a buyers’ market,” Mr Lawless said. “But the missing ingredient from a buyers’ market is buyers.”

The national preliminary auction clearance rate has now dropped to the lowest level since April 2020 – when pandemic lockdowns were having a material impact.

Apartments for sale and under construction are seen at Burleigh Heads, on the Gold Coast, Queensland, Tuesday, June 23, 2026. (AAP Image/Jono Searle) NO ARCHIVING Credit: JONO SEARLE/AAPIMAGE

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Nationally, less than half of homes (47.2 per cent) that went under the hammer last week resulted in a sale.

That is compared to 65.8 per cent at the same time last year.

The number of homes heading to auction is also down – tracking 17.7 per cent lower during the traditional spring selling season.

“A lot of prospective sellers are probably just going to hold this out – weather the storm and maybe go to sell when conditions start to improve,” Mr Lawless said.