Melbourne and Sydney property market: sellers withdraw stock as listings tighten

New listings fell 12.6% in Sydney and 9.7% in Melbourne between May and August as owners held off selling. Brisbane and Perth are moving the other way.

Melbourne and Sydney sellers are pulling homes off the market rather than accepting lower prices. New listings fell 12.6% in Sydney and 9.7% in Melbourne between May and August, according to Ray White, while Brisbane and Perth are seeing stock build up as homes take longer to sell.

The supply squeeze in Sydney and Melbourne contrasts sharply with conditions in Brisbane and Perth.

According to Ray White chief economist Nerida Conisbee, new listings in Sydney and Melbourne fell faster than the national decline of 6.8% over the same period. Canberra recorded an even steeper fall, down 14.7%.

The pullback has flowed through to overall stock levels. Active listings have dropped 5.6% in Sydney and 7.4% in Melbourne since May. Canberra has followed a similar pattern, with active stock down 7.5%.

Why sellers are holding back in Melbourne and Sydney

Ms Conisbee said the trend reflects owners choosing not to sell when conditions are weaker, rather than a lift in buyer demand absorbing existing stock.

“Housing supply is highly responsive to market conditions. Unless an owner needs to sell, they can delay putting their property on the market when prices are weaker or buyers become more cautious,” she said.

The Reserve Bank picked up the same softening. Minutes from its August meeting, where it held the cash rate at 4.35%, noted that national housing prices had fallen about 1.5% from their March peak. Board members put the easing down to a combination of rate increases, tax changes announced in the Federal Budget and weaker sentiment. The minutes also noted that demand for new housing loans had declined significantly, particularly from investors.

Brisbane and Perth: fewer new listings, more stock

The picture in Brisbane and Perth is markedly different. New listings in those cities have also declined, down 2.7% in Brisbane and 10.5% in Perth since May.

However, active listings have moved sharply higher, up 27.5% in Brisbane and 20.2% in Perth, indicating that existing stock is taking longer to sell rather than owners rushing to list.

Adelaide is showing a milder version of the same pattern, with new listings up 2.4% and active listings up 15.0%.

A housing market splitting into two phases

Ms Conisbee said the divergence points to a housing market splitting into two distinct phases. Sydney and Melbourne, which experienced the earliest and largest weakness after the Budget, are now seeing sellers withdraw supply in response.

Brisbane and Perth, where conditions held up for longer, are instead grappling with a build-up of stock despite fewer new properties coming to market.

“After leading the initial downturn, Australia’s two largest housing markets are moving into a very different phase,” she said.

For agents in Sydney and Melbourne, the shrinking pool of stock represents a buffer against further price weakness. It tightens the balance between buyers and sellers at a time when demand has already softened on the back of Budget changes and higher interest rates.

Ms Conisbee cautioned the outlook remains fragile.

“A further interest rate rise would reduce borrowing capacity and weaken buyer demand again,” she said.

What tighter listings mean if you’re buying in Melbourne

Fewer homes on the market means less choice. Well-presented properties in popular suburbs can still draw competition even when overall demand is softer, because buyers are chasing a smaller pool of stock. If you’re looking in Melbourne’s west or elsewhere in the city, a few steps help:

• Know your borrowing capacity before you inspect. Rate rises reduce how much lenders will approve, so a figure from six months ago may no longer hold. Pre-approval gives you a working budget, though it isn’t a guarantee of final approval.
• Build in a rate buffer. Ms Conisbee’s warning about a further rate rise applies to your repayments as much as to the market. Check you could still manage if rates moved higher.
• Be ready to move. With fewer listings, good properties may not stay on the market long. Have your documents organised and know the steps before making a property offer.
• Watch days on market. A property that has been listed for weeks may give you more room to negotiate, even in a tight market.

First home buyers can also check what support is available through government-backed deposit schemes in Victoria, and how buying at auction works if that’s where you’re competing. Our spring buyer’s checklist and tips for buying at auction cover the rest of your preparation.

What it means if you’re thinking of selling

Lower stock levels in Melbourne and Sydney give sellers some protection against further price falls, because buyers have fewer alternatives. But they don’t guarantee a strong result, and Ms Conisbee’s comments make clear that demand remains sensitive to interest rates.

If you’re selling to buy your next home, consider both transactions together. Selling first removes the risk of carrying two loans but can leave you competing for a new home in a tight market. Buying first may mean bridging finance, which has its own costs and risks. Investors weighing a sale should also read about selling an investment property with sitting tenants.

Getting your finance ready

Whatever phase the market is in, buyers who know their numbers are better placed to act. A broker can check your borrowing capacity with several lenders, organise pre-approval and compare home loan options for your situation. For more on how price movements affect your borrowing decisions, read what rising prices mean for your home loan strategy in 2026. Attain Loans is a Melbourne West mortgage broker that helps buyers across the city compare lenders, subject to each lender’s assessment.

This article is general information only and doesn’t take into account your objectives, financial situation or needs. Consider whether it’s appropriate for you and speak with a licensed professional before making a decision.

Further questions

This is general information only and is subject to change at any given time. Your complete financial situation will need to be assessed before acceptance of any proposal or product.